Morgan Stanley Warns US Stocks Could Fall Another 8%, Keeps Year-End Target Intact
Summary
- Morgan Stanley said the S&P 500 could fall to 7,100 in the short term, warning that US stocks may face an additional decline of nearly 8%.
- It said funding pressures tied to AI, the US midterm elections and prolonged monetary tightening could add further downward pressure on US stocks in the coming weeks.
- Still, it maintained its 8,000 year-end target for the S&P 500 and said a rebound from 7,100 to 8,000 would amount to about 12.7%.
Forecast Trend Report by Period
Morgan Stanley warned that the correction in US stocks may not be over yet, while maintaining its forecast for a market recovery by year-end.
Mike Wilson, Morgan Stanley's chief US equity strategist, wrote in a client note on October 28 that the S&P 500 could fall to 7,100 in the short term. With the index at 7,700 that day, that would imply a decline of nearly 8%.
He cited funding pressures tied to artificial intelligence, the US midterm elections and a prolonged period of monetary tightening as key risks for US equities. Those factors could add further downward pressure in the coming weeks.
Morgan Stanley said that if the short-term correction unfolds as it expects, it could mark the biggest decline since markets were rattled by the Iran war earlier this year.
Still, the bank kept its year-end target for the S&P 500 at 8,000. If the index falls to 7,100 and then rebounds to that target, it would amount to a gain of about 12.7%.
JOON HYOUNG LEE
gilson@bloomingbit.ioCrypto Journalist based in Seoul