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Morgan Stanley Warns US Stocks Risk 22% Slump

  • US equities could slump another 22% from current levels: MS
  • Goldman’s Kostin also sees 2023 earnings estimates as too high
Bloomberg business news
Morgan Stanley's Wilson: Sell S&P 500 at 3,900

US equities face much sharper declines than many pessimists expect with the specter of recession likely to compound their biggest annual slump since the global financial crisis, according to Morgan Stanley strategists.

Michael Wilson — long one of the most vocal bears on US stocks — said in a research note that while investors are generally pessimistic about the outlook for economic growth, corporate profit estimates are still too high and the equity risk premium is at its lowest since the run-up to 2008. That suggests the S&P 500 could fall much lower than the 3,500 to 3,600 points the market is currently estimating in the event of a mild recession, he said.