Morgan Stanley Chief U.S. Equity Strategist: Market Adjustment Nearing End, Current Period May Be a Bull Market Pullback

Gate News reports that on March 18, Morgan Stanley’s Chief U.S. Equity Strategist, Michael Wilson, released a market analysis report presenting a view contrary to the current market panic. Wilson believes that the recent sharp market correction has matured in both time and space dimensions, and that the market is approaching a bottom rather than beginning to decline. Data shows that 50% of stocks in the Russell 3000 Index (U.S. large-cap stocks) have fallen more than 20% from their 52-week highs, and over 40% of stocks in the S&P 500 Index are in bear market territory, indicating that half of the stocks have entered a bear market zone. The apparent decline in the market underestimates the widespread internal losses. Wilson judges that this round of sell-off is a “correction within a bull market,” originating last fall during liquidity tightening, well before recent geopolitical conflicts escalated. He points out that the current capitulative sell-off often signals the end of a correction rather than its beginning. Unlike previous recessions accompanied by deteriorating earnings, the earnings of S&P 500 components are growing at a 13% rate and continue to accelerate. Wilson’s view is based on two main assumptions: that conflicts related to Iran remain controlled and that international oil prices stay below $100 per barrel. If oil prices break above and stabilize over $100, the market could shift from a correction to a more serious crisis.