Morgan Stanley Drops 2.39% Amid Fed Rate Concerns

On April 9, 2025, Morgan Stanley's stock experienced a 2.39% drop in pre-market trading, reflecting investor concerns and market dynamics.

Morgan Stanley's recent analysis suggests that President Trump's tariff policies could lead to higher inflation and slower economic growth, potentially keeping the Federal Reserve on hold throughout 2025. The bank's chief U.S. economist, Michael Gapen, predicts that while inflation will rise, the Fed is unlikely to change its interest rate policy unless a recession occurs. This cautious stance by the Fed could impact Morgan Stanley's performance, as higher inflation and slower growth may affect its investment banking and wealth management divisions.

Additionally, Morgan Stanley's wealth management chief economist, Ellen Zentner, believes that the Fed will not intervene to support the stock market through rate cuts, indicating that further market declines could be on the horizon. Zentner's prediction of a potential drop in the S&P 500 to 4600 points suggests that investors should brace for more volatility as trade tensions and economic uncertainties persist.

Looking ahead, Morgan Stanley is set to report its first-quarter earnings on April 11, 2025. Analysts expect solid revenue and earnings growth, but the focus will be on the bank's outlook and management's commentary on the economic environment. The ongoing trade wars and potential recession risks could impact Morgan Stanley's performance, particularly in its investment banking and trading activities. Analysts have mixed views, with some downgrading the stock due to increased uncertainty and others maintaining a cautious optimism.