Top Wall Street Analyst Warns Of 'Proper Bust' In 2023: Stocks Are Trading In 'High Risk Zone'
Portfolio Pulse from Piero Cingari
Morgan Stanley's chief U.S. equity strategist, Michael Wilson, warns of a potential sharp reversal in the stock market during the second half of 2023, with the S&P 500 Index possibly dropping 10%. This outlook is based on lower-than-expected earnings forecasts, unattractive equity risk premiums, and restrictive economic policies. However, in an alternative scenario, Wilson suggests that the equal-weighted S&P 500 and value stocks may outperform the market.
June 26, 2023 | 3:33 pm
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POSITIVE IMPACT
Morgan Stanley believes that value stocks, as tracked by the Ishares Russell 1000 Value ETF (NYSE:IWD), may outperform growth stocks in an alternative scenario.
In an alternative scenario, Morgan Stanley expects value stocks to outperform growth stocks as defensive sectors regain their previous year's leadership. This would positively impact the IWD ETF.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
In an alternative scenario, Morgan Stanley's Michael Wilson suggests that the equal-weighted S&P 500, as tracked by the Invesco S&P 500 Equal Weight ETF (NYSE:RSP), may outperform the market-cap weighted S&P 500.
If Morgan Stanley's earnings forecast is incorrect, Wilson expects market breadth to improve, with the equal-weighted S&P 500 outperforming the market-cap weighted S&P 500. This would positively impact the RSP ETF.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Morgan Stanley suggests that growth stocks, as tracked by the Ishares Russell 1000 Growth ETF (NYSE:IWF), may underperform value stocks in an alternative scenario.
In an alternative scenario, Morgan Stanley expects growth stocks to underperform value stocks as defensive sectors regain their previous year's leadership. This would negatively impact the IWF ETF.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Morgan Stanley's Michael Wilson warns of a potential 10% drop in the S&P 500 Index, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), in the second half of 2023 due to various headwinds.
The potential drop in the S&P 500 Index is based on Morgan Stanley's lower-than-expected earnings forecasts, unattractive equity risk premiums, and restrictive economic policies. These factors may lead to a sharp reversal in the stock market, negatively impacting the SPY ETF.
CONFIDENCE 80
IMPORTANCE 90
RELEVANCE 100