Tariff-related headlines have roiled stocks since President Donald Trump’s initial surprise rollout, and investors shouldn’t let their guard down, according to Morgan Stanley. “Investors should prepare to be fooled many more times,” the firm’s strategists led by Matthew Hornbach said in a note to clients titled “Fool Me Once, Shame On You. Fool Me Twice, Shame On Me.” “Hold your convictions loosely and keep your stops tight. If a master plan exists – e.g., offset the negative economic impact of tariffs with fiscal and monetary easing – it’s unlikely to work in the way the US administration envisions,” they said. Stocks initially rose Monday morning after Trump exempted smartphones and computers as well as other devices and components like semiconductors from his new “reciprocal” tariffs, but the gains were kept in check as Commerce Secretary Howard Lutnick indicated the exemptions aren’t permanent , stirring up more tariff uncertainty. Wall Street experienced one of the most volatile weeks last week. On Wednesday, the market soared after Trump announced a 90-day reprieve for a number of his new tariff rates, with the S & P 500 seeing its third-biggest one-day advance since World War II. The next day, stocks ended up giving up some of their historic gains. .SPX 1M mountain S & P 500 “Among the many challenges investors face today, two make navigating markets particularly frustrating: (1) figuring out the US administration’s ‘master plan’ for trade policy, and (2) predicting how often it may change or flex,” Morgan Stanley said. The firm pointed out that some interpreted Trump’s call for the Federal Reserve to cut interest rates as his grand plan to offset any negative economic impact. However, it might not work as planned, the firm said. “The problem with this perceived plan entails the lags with which both monetary and fiscal policy operate relative to those of trade policy changes,” Morgan Stanley said. “Consumer confidence already cracked ahead of the April 2 reciprocal tariff announcement. The 90-day pause unlikely provides much relief.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
