Why Morgan Stanley Stock Sank Today

Shares of Morgan Stanley (NYSE: MS) fell on Thursday. The wealth management and investment banking giant's stock lost 9.5% as of market close and was down as much as 10.4% earlier in the day. The decline comes as the S&P 500 and Nasdaq had their worst day in years.

President Donald Trump's dramatic tariff announcement has sent shockwaves through financial markets, hitting investment banks particularly hard.

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Trump's tariffs are here

Morgan Stanley shares are under pressure following President Trump's announcement of sweeping new tariffs that threaten to upend global trade. The new levies include a 34% tax on Chinese imports, 20% on European Union goods, and a baseline 10% tax on all countries -- representing what economists are calling the most significant trade action since the 1930s.

As a global financial services firm with significant international exposure, Morgan Stanley is particularly vulnerable to the potential economic fallout. The bank's wealth management, investment banking, and trading operations will all be impacted by the tariffs and their fallout.

M&A implications

Morgan Stanley is a major player in the merger and acquisition (M&A) market. In light of the new tariffs, clients are likely to hold off on any major M&A activity. An uncertain market is not a market conducive to M&A by and large. Analysts have noted that dealmaking pipelines, which had been showing signs of recovery after a slow 2024, may face renewed headwinds if companies delay strategic decisions to assess the tariffs' impact on their business models and supply chains. I would take a wait-and-see approach for now.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.