My mom has an 88 jeep jeep cherokee limited 4.0 with an auto trans. Last winter while I was driving it the transmission stopped down shifting while in drive. I can manuaully shift throw the gears but when in drive it jumps right into 4th gear. My mom got a good deal on another tranns so I swapped it and the problem is still there. It drives fine as long as I shift it manually. Could it be the tourque converter preventing it from down shifting? Any help would be greatly appreciated.

Usually manually shifting an automatic is not a good idea. I'd take this to be looked at professionally since you already swapped out the tranny once.