NEW YORK (CNNMoney.com) -- It's become a mantra among the three investment banks that reported third quarter earnings this week: don't fret about the economy's impact on deal-making.

Bear Stearns (up $0.17 to $136.39, Charts) on Thursday became the latest broker to try to assuage Wall Street's fears about the outlook for investment banking, as it reported surprisingly strong third-quarter earnings and assured analysts that it has a healthy line up of M&A deals and capital-raising offerings for its corporate clients.

Bear Stearns reported fiscal third quarter earnings of $3.02 a share, courtesy of sharp gains in its wealth management division and its trading and sales units, which helped offset weakness in investment banking amid a slowdown in underwriting.

The company's results sharply beat Wall Street's lowered expectations of $2.87 according to earnings tracker Thomson First Call.

But the company, which experienced a nice boost in its stock price as both Goldman Sachs (Charts) and Lehman Brothers (Charts) reported unexpectedly strong quarterly reports over the last two days, saw some weakness in its shares Thursday.

David Trone, analyst at Fox-Pitt Kelton, said shares of the three companies and competitor Morgan Stanley (Charts) which will report earnings next week, are now fairly valued at current levels due to the recent runup.

That may curb any upside momentum for the stocks in the near term.

Louise Westerlind, an analyst at the securities and investment group at independent consulting and research firm Celent LLC, said Wall Street was surprised at the positive results issued by the three major investment banks. But she said there is still concern that a downturn in M&A activities and debt and equity offerings is inevitable.

"It's postponing the inevitable," she said. "We have to see what happens in terms of interest rates, inflation and economic growth in general."

And Bear Stearns financial chief Samuel Molinaro was careful to caution analysts during the company's earnings call that if the market turns lower, deals may not come to fruition.

Still, he said the company had a "robust" pipeline of investment banking deals, particularly when it comes to M&A activity and equity offerings.

"The backlog of investment banking deals is near all-time highs," he said.

But he did concede that M&A and equity deals did decline marginally from the second quarter.

In recent weeks, analysts sharply cut estimates for Bear Stearns and its peers, citing concerns over market volatility and economic prospects. Wall Street feared the investment banks would take a hit in both their trading operations during the seasonally slow summer months and investment banking as corporations pushed off deal making.

On a quarterly basis, Bear Stearns did see sharp declines in its capital markets unit, which encompasses both investment banking and trading. Total capital markets revenue fell 23 percent from the second quarter but was up 12 percent from the third quarter of last year.

But Molinaro said there is still "a high level of interest from corporate clients" when it comes to M&A.

That positive sentiment mirrored comments from executives at Goldman Sachs and Lehman Brothers earlier this week.

Both equities and fixed-income trading results jumped from last year even if they were down from an unusually strong first half of 2006. Revenue at Bear Stearns fixed income unit - the broker's largest segment - jumped 19 percent from prior-year results, despite a decline in mortgage industry volumes.

Bear Stearns is the No. 1 underwriter of U.S. mortgage-backed securities.

Westerlind said Wall Street will be keeping a close eye on the company's mortgage-backed securities business going forward as the housing market continues to soften.

One area, however, that is showing promise is Bear Stearns wealth management division.

Asset management revenue surged 87 percent over the prior year, largely driven by high performance fees related to the company's proprietary hedge-fund products.

"It will be interesting to see how fees grow if they keep developing that product" Westerlind said.

Morgan Stanley is the last investment bank slated to report this fiscal third quarter. The company will issue its earnings release on Sept. 20.

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