Morgan Stanley Drops 4.2% on Revised Earnings Forecasts

On April 3, 2025, Morgan Stanley's stock price dropped by 4.2% in pre-market trading, reflecting investor concerns and market dynamics.

Morgan Stanley has revised its earnings forecast for Long and Win, a Hong Kong-based company, due to higher tax rates. The firm has lowered its earnings per share (EPS) estimates for the next two years by 11% and reduced its dividend forecasts by 11% and 12% respectively. Despite the high base from last year's performance, Morgan Stanley expects the company to continue growing in the coming years.

Additionally, Morgan Stanley has adjusted its expectations for the Federal Reserve's interest rate cuts. The firm has pushed back its prediction for the next rate cut to March 2026, citing concerns over inflation driven by tariffs. Economists at Morgan Stanley, including Michael Gapen, believe that the Fed will struggle to ignore recent inflation trends and will be cautious in easing monetary policy.