By Andrew Welsch

Tariff-related market turmoil hit wealth management and brokerage stocks on Monday, sending prices tumbling again after last week's sharp selloff.

Shares of Robinhood Markets were down 1.6% as of noon Monday. Charles Schwab and Morgan Stanley dropped 1% and 0.86%, respectively.

The S&P 500 was down 1.4% and the Vanguard Financials ETF, which tracks a broad basket of financial stocks, was down 1.1%.

Stock markets plunged last week after President Donald Trump announced tariffs that exceeded Wall Street's expectations. Bank and wealth management stocks were hit hard as investors weighed concerns that tariffs will lead to slower economic growth or even a recession.

Either outcome couldn't only reduce loan demand but also cause customers to fall behind on loan payments. It could also curb merger and acquisition activity, which would hurt companies such as Morgan Stanley, which operates a large investment bank in addition to its wealth management business.

Although market volatility may lead to a temporary bump in revenue for trading desks, market declines lead to lower fees on financial advisory accounts, which typically are charged as a percentage of clients' assets under management. That is a headwind for wealth management companies that are dependent on fee-based revenue.

This month's tariff-induced selloff has hit some highflying financial stocks particularly hard. Robinhood shares were changing hands at $33.95 in New York, about half of their 52-week high of $66.91. Shares soared last year on expectations that the fast-growing company would benefit from a surge in cryptocurrency prices and investors moving assets to Robinhood. That sunny future is suddenly a bit more cloudy as prices for Bitcoin and other digital assets have fallen, and investors may be less willing to put money in their brokerage accounts if the economy goes into a recession.

Interactive Brokers, another hot performer last year, fell 1.3% Monday morning. The stock is down 21% so far this year and was trading at $144.22, far below its 52-week high of $236.53.

Shares of other wealth management and brokerage firms were also falling Monday. Raymond James Financial's stock dropped 0.7%. Ameriprise Financial slid 0.2%, and Stifel Financial fell 2.1%.

Write to Andrew Welsch at andrew.welsch@barrons.com

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April 07, 2025 12:10 ET (16:10 GMT)

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