Morgan Stanley warns: U.S. stocks may fall further 8%, with a rebound expected after major risks clear
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AT A GLANCE
Morgan Stanley said that pressures could cause the S&P 500 to decline by approximately another 8%in the near term, while maintaining a higher medium-term target.
Article
Morgan Stanley warns: U.S. stocks may fall further 8%, with a rebound expected after major risks clear
BlockBeats News,October 28, Morgan Stanley Chief U.S. Equity Strategist Mike Wilson said in his latest client report that AI financing pressures,November 3 U.S. midterm elections, and tighter financial conditions could push the S&P 500 Index to around 7100 points in the coming weeks, down approximately 8%from recent levels. This would be the largest correction since market turmoil triggered by the Iran war this year.
Morgan Stanley statistics show that, since the beginning of June, approximately 3000 of Russell 60%Index constituent stocks have declined by more than 20%from their highs, while approximately 96%of semiconductor stocks have fallen by more than 20%. The bank expects the semiconductor sector could still decline by another November before mid-10%to 15%. Credit spreads on data-center-related bonds have widened, and CoreWeave's debt also entered distressed-debt territory this month. The Federal Reserve September has raised interest rates to 3.75%to 4.00%, driving bond yields higher and tightening financial conditions.
Despite its cautious near-term outlook, Morgan Stanley maintains its year-end target of 500 points for the S&P 8000 Index and sets its base-case target for the next 12 months at 8300 points. The bank believes markets typically perform better after midterm elections. 1950 to 2022 data show that, after elections, the S&P 3 Index rises by an average of approximately 500 over 8%months.
Original link https://m.theblockbeats.info/flash/374195
Key points
01
Mike Wilson said in a client report that AI financing pressures,November 3 U.S. midterm elections, and tighter financial conditions could push the S&P 500 Index down to around 7100 points in the coming weeks.
02
The report states that 7100 points is approximately lower than recent levels by 8%。
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Morgan Stanley statistics state that, since the beginning of June, approximately 3000 of Russell 60%Index constituent stocks have declined by more than 20%from their highs, while approximately 96%of semiconductor stocks have fallen by more than 20%。
04
Morgan Stanley expects the semiconductor sector could still decline by another November before mid-10%to 15%。
05
The article states that credit spreads on data-center-related bonds have widened, and CoreWeave's debt entered distressed-debt territory this month.
06
The article states that the Federal Reserve September has raised interest rates to 3.75%to 4.00%, driving bond yields higher and tightening financial conditions.
07
Morgan Stanley maintains its year-end target of 500 points for the S&P 8000 Index and sets its base-case target for the next 12 months at 8300 points.
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The article cites 1950 to 2022 data, stating that, after midterm elections, the S&P 3 Index rises by an average of approximately 500 over 8%。
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
This report relays Morgan Stanley's view: U.S. stocks may remain under pressure in the near term, with risks in the semiconductor sector particularly pronounced; however, the bank believes markets may improve after risks ease, so its year-end and next 12-month targets remain above the near-term projected level.
Why it matters to readers
If the above forecast materializes, the S&P 500 and the semiconductor sector could face further declines; changes in data-center bond credit spreads, bond yields, and financial conditions are also monitoring signals highlighted in the article.
Beginners should distinguish between “data that have already occurred” and “institutional forecasts”: descriptions of historical declines, interest rates, and credit spreads do not mean that further declines are certain, 7100 points, 8000 points, and 8300 points are all targets or assessments in the report.
Risks and unknowns
The report is a retelling of a Morgan Stanley client report and does not provide the original client report, so the full context cannot be independently verified.
The S&P 500 falling to 7100 points, semiconductors falling another 10%to 15%, and the subsequent rebound are all forward-looking assessments, not facts that have already occurred.
Historically, average performance over the 3 months following elections cannot confirm that the market will produce the same result this time.
The article does not explain the AI specific calculation methods or data sources for financing pressures, credit spreads, and CoreWeave's distressed-debt territory.
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