Morgan Stanley's Wilson: "US S&P500 could fall 5% to maximum 20%"

"Volatility expanding due to tariff impact on corporate earnings and reduced fiscal spending"

Maintains year-end S&P500 target index of 6,500 points

Morgan Stanley's Michael Wilson forecasts that US stocks will fall 5% more this year due to concerns about tariff impacts on corporate earnings and reduced fiscal spending. He stated that if there are signs of economic recession, stocks could fall by up to 20%.

According to Bloomberg on the 10th (local time), Wilson projected in a memo to clients that "the S&P 500 will hit a low of about 5,500 points in the first half of this year." He said it would then recover to 6,500 points by the end of the year.

6,500 points represents a 13% increase from last Friday's S&P500 level. However, Wilson wrote that "the market path is likely to be unstable, and will fall further before recovering in the second half."

Wilson also pointed out that in the worst case, if a recession begins, investors should prepare for a correction of more than 20%. He said that while the US economy does not yet appear to be entering a recession, "there is a need to prepare for the downward trend that would be seen in a bear situation to manage risk."

However, Wilson said that looking at seasonal patterns, there is room for improvement in corporate earnings forecasts and S&P500 corporate performance over the next few weeks.

US stocks have been sluggish this year due to valuation concerns about Big Tech and uncertainties such as Trump's tariff policies. Big Tech has led the S&P rally for the past two years. Recently, Wall Street analysts have lowered their earnings forecasts for S&P500 companies this year.

Kim Jung-a, Contributing Writer kja@hankyung.com