Morgan Stanley Sees Equity Pullback Nearing End, Forecasts 6,400–6,500 Support
Morgan Stanley strategist Michael Wilson says the equity pullback is nearing its later stages, with half of Russell 3000 stocks down 20% from 52-week highs. He forecasts S&P 500 support at 6,400–6,500, resistance near 6,850, cites 13% earnings growth and profit-taking in small caps while maintaining a constructive outlook.
1. Current Pullback Assessment
Morgan Stanley strategist Michael Wilson argues the latest equity correction is in its later stages as 50% of Russell 3000 stocks are down at least 20% from 52-week highs. He suggests the market has already moved ahead of obvious risks and anticipates only modest further declines.
2. Support and Resistance Levels
Wilson identifies durable support in the S&P 500 at the 6,400–6,500 range if the 200-day moving average breaks, with resistance anticipated near 6,850. This trading band frames near-term price expectations for investors.
3. Earnings Growth and Fiscal Support
He highlights that S&P 500 earnings growth has accelerated by 13%, a contrast to prior late-cycle periods when oil shocks undermined expansions. He also notes strong fiscal stimuli and improving business-cycle momentum underpin the market.
4. Small Cap Positioning and Outlook
The bank is taking profits in small-cap stocks and moving to neutral on the group, while maintaining a constructive 6- to 12-month outlook. It warns short-term volatility may persist amid geopolitical tensions but expects overall stability.