Morgan Stanley Logs Biggest Single-Day Drop Since April 2025 as Banks Plunge Over 5%
Morgan Stanley shares tumbled their most since April 2025 as banks and brokerages fell over 5% Friday following AI-driven recession fears; Goldman Sachs, Citigroup and Wells Fargo also posted steep declines. Energy stocks outperformed tech for 10 weeks and value stocks led growth by 12% year-to-date.
1. Banks Face Worst Decline Since April 2025
Major banking and brokerage stocks experienced their steepest one-day drop since April 2025, with Goldman Sachs, Morgan Stanley, Citigroup and Wells Fargo all falling by more than 5% on Friday. The selloff was driven by growing concerns that rapid AI adoption could trigger widespread corporate cost cuts and elevated unemployment.
2. Morgan Stanley Plunges Over 5%
Morgan Stanley shares plunged over 5%, marking their largest single-day decline in ten months. The stock's drop mirrored sector-wide declines as investor psychology shifted towards skepticism despite recent technology sector gains.
3. AI-Driven Fears Intensify
Investor anxiety intensified after a research note projected U.S. unemployment rising above 10% by 2028 due to AI-driven automation, while Block Inc. announced workforce cuts from 10,000 to under 6,000 employees. These developments reinforced fears that AI could reshape labor markets faster than anticipated.
4. Sector Rotation Accelerates
This shift has fueled a broad sector rotation, with energy stocks outperforming technology for ten consecutive weeks and value stocks leading growth by 12% year-to-date. Market participants are reallocating capital towards asset-heavy industries perceived as less vulnerable to automation.