Why the post-earnings Morgan Stanley sell-off is an overreaction

US Top News and Analysis

Every weekday the CNBC Investing Club with Jim Cramer holds a Morning Meeting livestream at 10:20 a.m. ET. Here’s a recap of Wednesday’s key moments. 1. U.S. stocks fell in midmorning trading Wednesday, with the S & P 500 down 0.85% and the Nasdaq Composite losing more than 1%. The move lower came as oil prices spiked on the back of escalating tensions in the Middle East, with Iran calling for an oil embargo on Israel. West Texas Intermediate crude, the U.S. oil benchmark, was up nearly 2%, at roughly $87 a barrel. Bond yields also remained elevated, with that of the 10-year Treasury hovering above 4.8%, despite heightened geopolitical risk that often drives investors to safe havens. 2. Club holding Procter & Gamble (PG) delivered strong quarterly results Wednesday, with earnings-per-share (EPS) climbing 17% year-over-year, to $1.83. Organic sales were up 7% annually, boosted by health care, grooming, and fabric and home care products. What matters most is that P & G was able to raise prices by 7% without sacrificing much volume. Meanwhile, Club name Morgan Stanley (MS) also reported a quarterly beat , even as EPS fell 6% year-over-year, to $1.38. The wealth management division’s net new assets of $36 billion were disappointing after the bank added $110 billion in the first quarter and $90 billion in the second quarter. But investors overreacted, sending the stock tumbling more than 7% Wednesday morning, to $74.50 a share. The bank is still on track to meet its target of adding $1 trillion in net new assets over three years. 3. Some Wall Street firms on Wednesday lowered their price targets on Club holding Nvidia (NVDA) in the wake of news the U.S. government is planning to further restrict the sale of advanced AI chips to China in the coming weeks. Citi lowered its price target on the chipmaker to $575 a share, down from $630, while reiterating a buy rating on the stock. The firm said it is “de-risking” fiscal year 2025 and 2026 estimates on the assumption it will be difficult for Nvidia to obtain export licenses from the government. It’s certainly a reason to be more cautious on Nvidia, even though the near-term impact should be limited. (Jim Cramer’s Charitable Trust is long PG, MS, NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.