Charles Schwab Faces Downgrades and Cash Sorting Issues Amid Market Volatility

Morgan Stanley downgraded Charles Schwab for the first time in seven years and slashed its target price due to clients pulling cash out of the firm's low-interest-rate bank accounts at twice the rate expected. Depositors are moving money from bank accounts into money market funds at a rate of $20 billion a month, depriving companies like Schwab of cheap funding and raising concern that it will have to sell bonds at a loss to cover outflows. Schwab's shares have fallen 29% this month.