Morgan Stanley: U.S. Stock Market Correction Nearing an End, Not the Start of a Sell-off

BlockBeats News, March 18th – Michael Wilson, Chief U.S. Equity Strategist at Morgan Stanley, released a report proposing a contrarian view to the current market panic. He believes that the current severe correction has matured both in time and space, indicating that the market is approaching a bottom rather than the beginning of a decline.

Data shows that 50% of stocks in the Russell 3000 Index have dropped more than 20% from their 52-week highs, with a similar proportion in the S&P 500 Index exceeding 40%. This suggests that half of the stocks are already in a bear market, and the apparent decline underestimates the breadth of the internal damage.

Wilson views this round of sell-off as a "pullback within a bull market," which started during last year's fall liquidity tightening, long before the recent geopolitical tensions escalated. In the current market, a capitulatory sell-off often signals the end rather than the beginning.

Unlike previous economic recessions accompanied by deteriorating earnings, the current S&P 500 earnings are growing at a rate of 13% and continuing to accelerate. Wilson's view is based on two major assumptions: that the Iran conflict remains contained and that oil prices stay below $100 per barrel. If oil prices were to break above and stabilize above $100, the market could transition from a pullback to a more severe crisis.