Morgan Stanley Predicts Over 20% Stock Drop in Early 2023

Morgan Stanley expects a sharp decline in the US S&P 500 index in early 2023 due to a revision in forecasts for the level of future earnings of companies. From current values, the market may fall by about 24% more

Photo: Brendan McDermid / Archyde.com

The S&P 500 could fall 24% from its current level in early 2023, informed Mike Wilson, Chief Equity Strategist at Morgan Stanley, in an interview with CNBC. Investors could face a sharp drop in the US stock market early next year as corporations start to report lower earnings forecasts, which will hurt stock prices, the expert warned.

Morgan Stanley’s target level for the S&P 500 index at the end of next year is 3900 points. But the dynamics of the stock market will not be calm. Rather, the stock market could expect a “wild ride,” the analyst warned.
bear market
is not over yet, and the S&P 500 index will make significantly lower lows, he added.

On Tuesday, November 29, the S&P 500 closed at 3,957.6, down 17% from the start of the year. In the first four months of 2023, the index could fall another quarter from current levels. Mike Wilson expects the S&P to fall into the 3000-3300 range in the first four months of next year. That is when the decline in corporate earnings forecasts will reach its climax, the expert pointed out.

The fall can be observed across the entire spectrum of papers. Large companies may suffer more than others, and not only the technology sector, but also the consumer and industrial sectors.

However, while investors should not get rid of all shares, Wilson believes. “Now is not the time to sell everything and run to hell, because the fall probably won’t happen until earnings forecasts fall in January-February,” he said. Over the next few weeks, the expert does not exclude the continuation of positive sentiment and a small “tactical” rally in the stock market until the end of the year.


Deutsche Bank predicts US market ‘roller coaster’ in 2023

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Investors and traders on the stock exchange, seeking to capitalize on a decrease in the value of assets. This strategy is applied to short positions (as opposed to “bulls”).

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