Finance

Morgan Stanley has a blunt message on S&P 500

Published

2 months ago

April 14, 2026

Morgan Stanley has a blunt message on S&P 500

Most investors still feel like the market is fragile. Morgan Stanley thinks it is further along than they realize.

In his Sunday Start note dated April 12, Morgan Stanley equity strategist Michael Wilson argued that the S&P 500 was in the process of carving out a low after hitting the bottom of the firm’s targeted correction range of 6,300 to 6,500. The bank has consistently maintained that this is a correction within a new bull market, not the start of a bear market.

“As always, the market trades in advance of the headlines. Investors should do the same,” Wilson wrote.

The correction began last October, Wilson noted. Since then, the S&P 500’s forward price-to-earnings ratio has declined 18% from its peak.

That kind of P/E compression typically accompanies a recession or an actively tightening Federal Reserve. Morgan Stanley’s base case includes neither.

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Beneath the surface, more than half of the stocks in the Russell 3000 have dropped 20% or more from their 52-week highs. Wilson does not see that as a sign of complacency. He sees it as a market that has appropriately discounted the risks.

The key supporting argument is earnings. Price damage for the S&P 500 has been contained to less than 10% because earnings growth is moving in the opposite direction from valuations. Falling multiples alongside improving earnings growth is, in Wilson’s framing, the signature of a bull market correction rather than a bear market.

Wilson addressed the comparisons being drawn to previous oil shocks directly. In those prior cycles, he noted, earnings were already deteriorating or falling sharply when energy prices spiked.

Today, earnings are accelerating from already high levels. The median company is growing earnings per share in the double digits, the fastest pace since 2021.

Tax refunds are running more than 10% higher this year, which Wilson cited as additional context for why the oil move feels more contained in practice than in headlines.

On other risks, Wilson argued that both private credit and AI disruption appear better understood by markets, with many affected stocks already down 40% or more.

On private credit specifically, he cited colleague Vishy Tirupattur’s view that risks are material but not systemic, and that tightening in private credit could ultimately drive business back toward traditional lenders.

With AI, Wilson said the disruption narrative has moved faster than actual implementation and that the enterprise application layer remains in early days. In the near term, he said AI looks more likely to support margins than compress them, particularly for early adopters.

Mordant/Getty Images

Wilson was clear about what stands between the market and its next leg higher. The equity-rates correlation has turned decisively negative again, meaning higher yields are once more a direct headwind for valuations.

The recent hawkish pivot from central banks, driven by commodity inflation concerns, is what Wilson identified as the primary source of current market anxiety and likely the final hurdle equities need to clear. He noted that part of last week’s brief rally coincided with falling bond volatility after Fed Chair Powell signaled a more neutral position.

Financial conditions are tightening, but Wilson observed that this dynamic could ironically create the conditions that allow the Fed to override its primary mandates. The key question, in his view, is whether conditions need to tighten further before they ease. He believes the issue will be resolved as the transition in Fed leadership is completed.

Morgan Stanley correction target range for S&P 500: 6,300 to 6,500
S&P 500 forward P/E decline from peak: 18%
S&P 500 price damage: less than 10%
Russell 3000 stocks down 20% or more: more than half
Median S&P 500 company EPS growth: double digits, fastest since 2021
Tax refunds year-over-year increase: more than 10%
Bull market start: April 2025, following 2022-2025 rolling recession trough

Wilson continued to favor a barbell approach. On the cyclical side, he highlighted financials, industrials, and consumer discretionary goods, where earnings remain strong and valuations have compressed. On the growth side, he pointed to the hyperscalers, where sentiment and valuations have also reset to what he called healthy levels.

The final phase of a correction is rarely clean, Wilson cautioned. Another retest is possible, particularly if rates or bond volatility push higher again. But he framed that possibility as consistent with a market continuing to carve out a low, not one entering a new bear market.

His closing message was direct: markets are already discounting a future that investors have not yet fully recognized. “Markets aren’t typically so gracious as to offer multiple opportunities,” Wilson wrote, which is why the bank has encouraged investors to be early rather than wait for confirmation.

Related: Barclays just made a surprising call on the S&P 500

This story was originally published by TheStreet on Apr 14, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.

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Finance

Consumer confidence plunges among younger adults

Published

2 hours ago

June 18, 2026

Press Room

Consumer confidence plunges among younger adults

Consumer confidence has plunged among traditionally optimistic younger adults amid fears for their personal finances and the wider economy, figures show.

GfK’s long-running Consumer Confidence Index remained unchanged at an overall score of minus 23 in June.

However, the analyst said this was was “misleading as, beneath the surface, there are new signs that confidence is weakening”.

Source: GfK

Neil Bellamy, consumer insights director at GfK, said: “The biggest fall this month is among those aged 16 to 29, traditionally one of the most optimistic groups.

“Here confidence has dropped 11 points over the past month to minus two, the lowest level seen for two years, driven by large falls in views on both their own personal finances and the wider economy.

“More broadly, there are now no demographic groups with a positive confidence score, including higher-income households earning £50,000 or more, who have slipped back into negative territory as of June.

“Confidence remains subdued and vulnerable to further economic or political uncertainty.”

Overall, confidence in personal finances over the coming year remained flat at minus two, four points lower than this time last year.

The measures of both personal finances and the economy over the previous 12 months were both slightly down, by two points and three points respectively, “reflecting the sense that things have been extremely tough over the last year for so many”, GfK said.

The only measure to increase was expectations for the wider economy over the next 12 months, up two points to minus 36 but still eight points below this time last year.

The major purchase index, an indicator of confidence in buying big ticket items, remained at minus 20, four points lower than June last year.

Finance

How US-Iran peace deal will affect our cost of living

Published

13 hours ago

June 18, 2026

Press Room

How US-Iran peace deal will affect our cost of living

“Ships of the World, start your engines. Let the oil flow!” said Donald Trump on social media after he announced the signing of an interim peace deal with Iran on Sunday. Under the agreement – which Iran acknowledged included a 60-day negotiating period for a final deal – the president said that following retrieval of mines, there would be a “toll free opening” of the Strait of Hormuz.

But many of the finer details remain “unclear”, said The Guardian. There are questions over the “exact timing of the reopening of the maritime route, who will oversee safe passage and whether any conditions will be applied”.

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Finance

Hong Kong graduates prefer careers in finance, survey finds

Published

23 hours ago

June 17, 2026

Press Room

Hong Kong graduates prefer careers in finance, survey finds

Hong Kong graduates believe the city’s finance industry is its most attractive and stable sector, making them more optimistic about career opportunities than their global peers, according to a study by the CFA Institute, which trains investment managers.

The US-based institute’s “2026 Graduate Outlook Survey”, released on Wednesday, found that 71 per cent of Hong Kong graduates rated their career prospects between eight and 10 out of 10. The global average for that level of optimism was 59 per cent.

The graduates’ view of careers in finance reflected “both the sector’s resilience and Hong Kong’s continued strength as an international financial centre, which ranks third worldwide and first in Asia-Pacific”, the institute said in a statement.

The findings also indicated that young people were confident about Hong Kong’s role as an international financial centre, resilient amid global uncertainties, and strategically focused on improving skills, it said.

That confidence was “deeply grounded”, it said, with nearly 90 per cent believing they had the skills to succeed and clearly understood what employers were looking for, notwithstanding the wider adoption of artificial intelligence in the city.

“Rather than viewing AI as a threat, 38 per cent of Hong Kong graduates believe it has no negative impact on their job hunting, and 37 per cent believe it makes securing a job easier,” the institute said. “Three quarters are already actively using AI tools in their job applications, demonstrating a proactive, tool-first mindset.”