Morgan Stanley Forecasts Stock Market Has Seen Worst of Downside Momentum – Here’s the Bank’s Forecast

Banking large Morgan Stanley thinks the S&P 500 is near carving a significant market backside after dropping under the 5,000-point degree final week.

In a brand new CNBC interview, Mike Wilson, Morgan Stanley’s CIO and chief US fairness strategist, says the inventory market doubtless witnessed a capitulation occasion on April seventh after plunging to a brand new 2025 low of 4,835 factors.

Capitulation occurs when buyers throw within the towel as a consequence of most worry and panic, resulting in a pointy value drop. It suggests {that a} market backside is in sight as sellers sometimes run out of belongings to unload.

Says Wilson,

“I feel we’ve seen the worst of the momentum. We’ve most likely made the momentum low, the capitulatory low for this correction. Wherever it’s going to finish up being – whether or not it’s 20%, 25% [lower] – I feel it’s going to be a variety of testing.

The affected person had a coronary heart assault. Now the affected person has to recuperate.”

Wilson additionally says the inventory market priced in recession fears throughout final week’s corrective transfer. He now believes the S&P 500 will commerce sideways in a variety and won’t resume its uptrend until buyers get a transparent image of the place the financial system is headed.

“[April 7th] was a transparent capitulation day. That was the second of recognition that, ‘Hey, we could also be going over the sting right here on the recession.’ And we priced lots.

4,900 [to] 4,850 was a degree that we’ve been looking for, and we discovered that degree. We had a 1,000-point rally in two days. So now we’re caught in a spread, now the markets are going to do what they all the time do: they’re going to be risky till we now have readability on how deep this progress slowdown goes to be and what does a restoration appear to be popping out of that.”

As of Tuesday’s shut, the S&P 500 is buying and selling at 5,386 factors.

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