Morgan Stanley strategist Wilson says the S&P 500 correction is nearing its final stage
- Correction driven by Middle East war-related risk repricing
- Forward P/E has compressed ~17%, in line with past non-recession growth scares
- The market has largely priced in the rise in oil prices
- Breadth is weak: >50% of Russell 3000 constituents down >20%
- Signals suggest the correction is closer to the end than the beginning
- The market is less complacent on growth risks than the investor consensus implies
- Key risk: rising yields — US 10yr nearing ~4.5%, a level that historically pressures equity valuations
Context
Morgan Stanley's strategist suggests that the S&P 500's correction may be nearing its conclusion, with signals indicating this downturn is closer to its end rather than its start. The commentary highlights concerns around rising oil prices and soft market breadth but notes that much of the risk is already factored in. Key risk remains the potential impact of rising yields on equity valuations, particularly with the US 10-year approaching critical levels.
Trade the TapeGet this analysis live, the moment it breaksNewsquawk's real-time dashboard delivers market-moving headlines and instant context to your desk before the rest of the market reacts.
Open Dashboard#MORGAN STANLEY#ECONOMIC COMMENTARY#ENERGY#EU SESSION#WTI#COMMODITIES#INVESTMENT BANKING & BROKERAGE#CAPITAL MARKETS#FINANCIAL SERVICES