Morgan Stanley Chief U.S. Equity Strategist: Market Correction Near End, Not Beginning of Selloff

Mars Finance News, March 18 — Morgan Stanley Chief U.S. Equity Strategist Michael Wilson released a report offering a contrary view to the current market panic. He believes that this sharp correction has matured in both time and space, and the market is approaching a bottom rather than the start of a decline. Data shows that 50% of stocks in the Russell 3000 index have fallen more than 20% from their 52-week highs, and in the S&P 500, the proportion exceeds 40%, indicating that half of the stocks are in a bear market. The apparent decline underestimates the widespread internal losses. Wilson considers this sell-off a “correction within a bull market,” which began last fall with tightening liquidity, well before recent escalations in geopolitical conflicts. Current capitulation-style selling often signals an end rather than a beginning. Unlike previous recessions accompanied by deteriorating earnings, the S&P 500’s earnings are currently growing at 13% and continue to accelerate. Wilson’s view is based on two main assumptions: that the Iran conflict remains under control and oil prices stay below $100 per barrel. If oil prices break above and stabilize above $100, the market could shift from a correction to a more serious crisis.