Morgan Stanley’s Wilson Signals US Market Selloff Is Near A Bottom: Report

• Morgan Stanley looks at “any further weakness in the short-term as an opportunity to add long exposure into next year.”
• The Bloomberg report noted that Morgan Stanley is bullish on consumer discretionary, healthcare, financials, industrial, and small-cap stocks.
• Wilson noted that the markets could go back up as the Federal Reserve delivers more interest rate cuts, adding that he sees AI driving efficiency gains.

Morgan Stanley strategist Michael Wilson reportedly said in a note on Monday that the recent U.S. stock market volatility is likely nearing an end as the selloff winds down.

According to a Bloomberg News report, Wilson reiterated his bullish outlook for next year. He said that Morgan Stanley looks at “any further weakness in the short-term as an opportunity to add long exposure into next year.”

“The weakness under the hood is a sign that we’re closer to the end of this correction than the beginning,” Wilson said in the note. He stated that any further volatility can’t be ruled out in the short term.

AI Bubble Concerns

In the last couple of weeks, particularly since the beginning of November, investors have become increasingly concerned about the valuations of large technology companies, particularly in light of the recent surge in their investment in artificial intelligence (AI) and their ability to scale AI growth.

U.S. markets have experienced a sell-off since then, raising concerns about a slowdown in the strong momentum they had maintained so far. Wall Street has noted that there are worries about high equity valuations, U.S. liquidity constraints and the behaviour among mega-cap US tech stocks around AI.

Leading figures in the financial world have expressed concerns, including Michael Burry’s bet against certain big-name tech stocks such as Nvidia and Palantir.

Morgan Stanley’s View

The Bloomberg report noted that Morgan Stanley is bullish on consumer discretionary, healthcare, financials, industrial, and small-cap stocks. The strategists expect the S&P 500 to rally to 7,800 a year from now.

The report added that the forecast implies about an 18% rally from current levels and a sharp rebound from the current pullback. Wilson noted that the markets could go back up as the Federal Reserve delivers more interest rate cuts, adding that he sees AI driving efficiency gains.

Meanwhile, U.S. equities rose in Monday’s premarket trading. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.31%, the Invesco QQQ Trust ETF (QQQ) rose 0.53%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) increased 0.06%.

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Also See: Pony AI Stock Rises Pre-Market On Securing Funding From Sunlight Mobility To Scale Robotaxis

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