Why Morgan Stanley Stock Dropped on Monday
Key Points
Citrini Research published a report today outlining the economic risks of AI agents.
AI agents should be good news for consumers, but could be bad news for corporate profits.
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Stock markets got rocked Monday, with the Dow down 1.3% amid concerns over a new report from Citrini Research, laying out economic risks from AI agents.
Financial giant Morgan Stanley (NYSE: MS) stock is down 4.3% as of 1:30 p.m. ET.
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How Citrini Research tanked the market
If you haven't heard of Citrini Research, don't feel bad -- neither had I. But according to its website, Citrini provides "deep insights into thematic equity investing and global macro trading ... for institutional investors."
Today's report focuses on how artificial intelligence agents -- "software systems that use AI to pursue goals and complete tasks on behalf of users," as Google puts it -- could hurt white-collar employment. Currently, 33% of Americans already use AI agents. Over the next couple of years, though, Citrini sees AI agents becoming ubiquitous, helping consumers shop online for goods and services, and sign up for and cancel subscription services automatically, without friction, to get consumers better prices.
Lower prices for consumers mean less profit for companies, which may cut costs by laying off workers to help short up their profit margins. By 2028, Citroni sees AI agents causing 10% overall unemployment -- and putting half of all white-collar workers out of work -- while crushing the S&P 500 for a 38% loss.
What this means for Morgan Stanley stock
Why is this bad news for Morgan Stanley stock in particular? Workers who lose their jobs may struggle to repay their debts, leading to loan losses at Morgan Stanley. Corporate borrowers, too, may be at risk as their profits erode. Yields on corporate debt will rise, hurting the value of the bonds Morgan Stanley already holds. Some borrowers will simply default on their loans.
This could be bad news for bank stocks. Morgan Stanley investors are just starting to realize that today.
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Rich Smith 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.
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