Morgan Stanley sees the U.S. stock market correction nearing its end, though chief U.S. equity strategist Michael Wilson warned that another decline could precede a year-end rally.
The S&P 500 rose 2.3 percent to close at 7,549.94 on Nov. 9, recovering much of the previous week’s 2.7 percent loss.
“The good news is that this correction looks much closer to the end than the beginning,” Wilson said in a Nov. 9 podcast.
He maintained a support range of 7,100–7,300 for the index, while cautioning that it could retest last week’s lows or fall further before a sustained recovery.
Wilson favored adding positions over the coming weeks in quality cyclical stocks with sharply lower valuations and improving earnings forecasts. He singled out industrials, pointing to improving order backlogs and freight volumes.
Semiconductor shares had fallen about 40 percent from their June highs, he said, bringing them closer to his downside targets.
His team sees a manageable earnings impact from any delays to data-center projects following the U.S. midterm elections. Such spending represents about 5 percent of forecast S&P 500 revenue in 2027, according to Morgan Stanley’s estimates.
Wilson said much of that risk was already reflected in valuations and continued to favor companies using AI to improve productivity, cut costs and generate revenue.
He cautioned, however, that a more restrictive Federal Reserve stance could prolong the correction into December.
