Morgan Stanley (MS) CEO James Gorman apologized to analysts on Wednesday for having a cold while discussing the company’s first-quarter results. What those results also confirmed is that a key source of revenue for Wall Street is ailing, too.

Investment banking fees in the first quarter dropped 24% at the bank from the year-earlier period as deal making dried up amid a rapid rise in interest rates, economic uncertainty, and the failures of two sizable regional banks in March.

And it wasn't just Morgan Stanley that reported a slowdown in the most glamorous service Wall Street firms provide. All of the major banks that advise on mergers or IPO underwriting reported drops in fee revenue during the quarter when compared with the same period a year earlier.

The largest decrease of 26% belonged to Goldman Sachs (GS), which typically outdoes its rivals when it comes to M&A advisory work, followed by a 25% drop at Citigroup (C) and a 20% drop at Bank of America (BAC). Even JPMorgan Chase (JPM) saw investment banking revenue down 19%. All are down even more when compared to the same period in 2021.

Morgan Stanley CEO James Gorman acknowledged to analysts Wednesday that underwriting and M&A "remain very subdued" but "these are revenues delayed, not dead."

Goldman CEO David Solomon said in a conference call with analysts on Tuesday that he expects "big strategic" deal activity in the second half of the year.

Other firms across the world had similar problems in the first quarter. Global M&A volume sank to its lowest level in 11 years during the first quarter, according to Dealogic, down 48% from the first quarter of 2022.

"Just when many thought a corner had been turned, global dealmaking plumbed another low in the first quarter," Dealogic said in its report about the quarter.

It wasn't long ago that deal making was responsible for helping Wall Street churn out record profits. The last boom came in 2021, when CEOs used surging markets as a reason to buy other companies, go public, or take on new debt.

Then came a year that most of Wall Street would like to forget.

In 2022, three major stock averages fell by the most since 2008 and bonds had their worst year on record. Inflation reached its highest level in four decades, triggering an aggressive series of interest rate hikes from the Federal Reserve.

All of that new economic uncertainty curbed the optimism needed from the corporate clients that are the lifeblood of Wall Street's investment banking business. As a result, bonuses were slashed and jobs were cut.

In January Goldman Sachs let go of roughly 3,000 employees, or 6% of its workforce. Morgan Stanley also cut 1,600 members of its staff in December, according to reports, or roughly 2% of its workforce.

The slump in investment banking during the first three months of 2023 contributed to a larger profit drop of 18% at Goldman. Trading revenues also fell 13%, including a 17% drop in fixed-income trading. Bank of America, by contrast, actually increased its fixed-income trading revenue from a year ago by 27%.

Solomon, Goldman's CEO, said the company's fixed-income trading drop is partly because of "significant outperformance" in the year-ago quarter. The company still collected revenues from that business of $4 billion.

JMP Securities' Devin Ryan told Yahoo Finance Goldman now has some chances to do what it has done before: win new business amid a tumultuous time.

"Goldman has navigated a lot of crises over its history and through those crises it takes market share," he said.

At Morgan Stanley, the investment-banking slowdown contributed to a larger 19% profit drop at the firm. Its CEO, Gorman, said the company is "seeing a growing M&A pipeline and some spring-like signs of new issuance emerging. That said, it largely remains a back half 2023 and full year 2024 story."

He predicted 2023 would end on a "constructive" note for his firm.

"It kind of reminds me of that Rolling Stones song: 'You can't always get what you want. But you get what you need.' I think about Morgan Stanley coming out of this and we're kind of getting what we need," he said, citing "decent revenue, decent earnings."

"I think we're very well positioned on a go-forward basis."

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