Morgan Stanley reported on Wednesday that affluent Americans seized the opportunity to buy stocks at discounted prices during the sharp downturn in the New York stock market last April.
According to Morgan Stanley’s second-quarter earnings report released that day, the firm’s net profit soared to 3.5 billion USD, marking a 15% increase from the previous year. This figure significantly surpassed the market consensus estimate of 3.2 billion USD.
The surge in profits was primarily attributed to a rise in commission revenue from the firm’s private banking division, which caters to high-net-worth individuals, as these clients engaged in aggressive dip-buying.
Sharon Yeshaya, Morgan Stanley’s Chief Financial Officer, told the Financial Times that when U.S. President Donald Trump announced sweeping reciprocal tariffs on April 2, causing a stock market plunge, wealthy clients rushed to snap up stocks at bargain prices, resulting in a substantial jump in the bank’s earnings.
Trump hailed the day as a liberation for the U.S., declaring his intention to implement a base tariff rate of 10% along with substantial reciprocal tariffs to free the country from what he perceived as exploitation by allies and trading partners.
Yeshaya noted that trading activity surged dramatically after this day of liberation, adding that the company observed a strong buying sentiment among retail investors throughout the second quarter.
In the wake of Trump’s tariff announcement, the stock market plunged, with the S&P 500 index, the most comprehensive gauge of the New York stock market, briefly entering bear market territory, which is defined as a drop of more than 20% from its peak.
However, the market rebounded a week later on April 9, when Trump reversed course and announced a 90-day suspension of the reciprocal tariffs.
Retail investors were the driving force behind this market recovery.
Morgan Stanley reported that its wealth management division, which oversees approximately 6 trillion USD in client assets, grew during the second quarter due to heightened client activity. The division’s revenue climbed to 7.8 billion USD, a 14% increase from the previous year.
During an analyst conference call, Yeshaya stated that retail investor activity was particularly robust in April. She noted that clients maintained strong momentum in their trading activities, responding to increased market volatility through the end of the second quarter.
Amid this buying spree, Morgan Stanley’s wealth management division attracted 59.2 billion USD in new funds during the second quarter of last year.
This figure surpassed market expectations of 45.8 billion USD and was substantially higher than last year’s second-quarter inflow of 36.4 billion USD.
Furthermore, revenue from Morgan Stanley’s equity trading division surged by 23% during the same period, reaching 3.7 billion USD. In contrast, revenue from fixed-income asset trading, including bonds, grew by a modest 9% to 2.2 billion USD.
