Morgan Stanley experienced a sharp downward pullback as broader market headwinds and surging benchmark Treasury yields dampened investor appetite across the financial sector. Heading into the Federal Reserve policy meeting, persistent inflation metrics and elevated crude oil prices renewed concerns that interest rates could remain restrictive for an extended period. The surge in long-term Treasury yields tightened financial conditions and prompted market participants to scale back risk exposure in large-cap financial institutions and rate-sensitive capital market firms.

From a fundamental and technical perspective, elevated broad-market volatility and risk-off sentiment created significant pressure on investment banking and asset…