Morgan Stanley’s Top Strategist Warns of Potential 10% Market Correction Before Election


Last updated: July 9, 2024
mike_wilson_at_bloombergtv
Courtesy of Bloomberg TV

In a stark warning to Wall Street, Mike Wilson, Chief US Equity Strategist at Morgan Stanley, cautioned investors about a likely 10% market correction ahead of the November presidential election.

Speaking on Bloomberg Television, Wilson highlighted the volatility stemming from the election, business earnings, and Federal Reserve policies.

“I think the chance of a 10% correction is highly likely sometime between now and the election,”  Wilson noted, citing widespread uncertainty.

He predicted a “choppy” third quarter, though he emphasized that such volatility isn’t unusual.

Despite his bearish outlook, the S&P 500 and Nasdaq continue their bullish streak, driven by optimism over Fed rate cuts and the surge in AI stocks.

On Monday, the S&P 500 reached a record 5,572.85, while the Nasdaq soared to an all-time high of 18,403.74.

Wilson estimated the chances of stocks closing the year higher than their current levels at just 20% to 25%.

“We’re stuck in this sort of environment that really a lot of active managers don’t like because it’s narrow, it’s hard to pick stocks again and it’s hard to outperform,” Wilson said.

Analysts from Goldman Sachs, JP Morgan Chase, and Citigroup echoed similar sentiments, pointing to “weakening” economic indicators.

Earlier this year, Wilson had raised his S&P 500 target to 5,400 by mid-2025, up from an initial 4,500 forecast, but now sees limited growth opportunities.

Wilson, however, advised investors not to panic, suggesting that a market dip could present a buying opportunity.

He recommended focusing on individual stocks rather than broad indexes to navigate the turbulent market landscape.

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