Morgan Stanley Drops 4.44% on Trump Tariff Inflation Fears

On April 9, 2025, Morgan Stanley's stock price dropped by 4.44% in pre-market trading.

Morgan Stanley has revised its economic outlook, predicting that President Trump's tariff policies will likely drive up inflation before slowing economic growth. This scenario could prompt the Federal Reserve to maintain its current stance throughout 2025. The bank's chief U.S. economist, Michael Gapen, noted that the Fed is unlikely to change its policy unless a recession occurs, as tariffs will immediately boost inflation and weaken economic activity in the future.

Ellen Zentner, Morgan Stanley's chief U.S. economist, also commented that the Federal Reserve is unlikely to intervene with rate cuts to rescue the stock market from recent sell-offs. She predicted that the S&P 500 could drop to 4600 points before finding a bottom, indicating a potential 7% further decline from recent levels. Zentner's outlook suggests that the market may experience significant volatility until there are clear signs of policy changes or economic stabilization.