S&P 500 Could Drop Another 5%-7% Before Bottoming, Says Morgan Stanley's Chief Investment Officer: Report

• Wilson said widely held, popular stocks could decline further before the market reaches a stable bottom.
• He noted last year’s tariff-driven selloff cut stocks about 20%, while the index is down only around 1% this year.
• Global markets have been volatile since late February, when U.S. and Israeli strikes on Iran heightened geopolitical tensions.

U.S. equities could reportedly face additional turbulence in the coming weeks, according to Morgan Stanley. The firm warned that the benchmark S&P 500 may slide further before a sustained recovery takes hold, even as long-term fundamentals remain supportive for stocks.

According to a Business Insider report, Mike Wilson, chief investment officer and chief U.S. equity strategist at Morgan Stanley, believes the market has not yet reached the bottom of the current downturn. 

Short-Term Market Pullback Expected

Wilson suggested the S&P 500 might retreat by roughly 5% to 7% over the next month before stabilizing.

"While much of the damage has likely been done to the most vulnerable parts of the equity market, the index remains vulnerable to another 5%-7% downside in my opinion, while crowded stocks could see double digit declines before a final low appears next month.”

-Mike Wilson, CIO, Morgan Stanley 

While weaker segments of the market have already suffered losses, Wilson explained that some popular and heavily owned stocks may still face sharper pullbacks before a lasting bottom forms.

Retail sentiment toward the SPDR S&P 500 ETF (SPY) was in the ‘bearish’ territory at the time of writing.

Comparison With Last Year’s Tariff-Driven Selloff 

The strategist also pointed to last year’s market slump triggered by reciprocal tariffs announced by Donald Trump, which led to a roughly 20% slide in equities. By contrast, the benchmark index has slipped only about 1% so far this year, despite investor concerns about artificial intelligence valuations and geopolitical tensions.

Global financial markets have experienced sharp swings since military strikes involving the United States and Israel against Iran escalated tensions in the Middle East at the end of February. 

Also See: GENIUS Act Stablecoins Could Result In Banking Boom, Says White House Advisor

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