Morgan Stanley CIO Mike Wilson says bear market likely to end in early 2023: Report

The bear market in the US equities may conclude sooner than investors think, Morgan Stanley’s Chief Investment Officer (CIO) Mike Wilson told Bloomberg television in an interview.

A well-known stock market rationalist, who correctly predicted this year’s slump, said that “We think ultimately the bear market will be over probably sometime in the first quarter…All of this is subject to revision. I want to make clear, if the market starts trading off again and the S&P 500 blows through 3,650 on the downside, we will be bearish again.”

According to Wilson, a 19 percent slump in the S&P 500 Index this year has left it testing support at its 200-week moving average of around 3,600, which could lead to a technical recovery. The S&P 500 has rallied nearly 6 percent since October 12, when it closed at lowest since November 2020, Bloomberg reported.

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Moneycontrol could not independently verify the report.

Blaming it on the expectations of falling inflation and lower interest rates, earlier this week Wilson reiterated that US stocks could grind higher. In a note to clients last week, he mentioned that the S&P 500 could rise to 4,150, which at the time was its 200-day moving average, in a bear market rally.

However, he expects second half of 2023 could be more painful for the US equities. Morgan Stanley is forecasting that the S&P 500 will close at 3,900 by next June, according to the latest Bloomberg survey conducted in mid-October.

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It may be worth mentioning that not all strategists are hopeful that US equities will bottom soon.

According to Goldman Sachs Group Inc., conditions for a trough aren’t visible yet as stocks don’t fully reflect the latest rise in real yields and odds of a recession.

Earlier this week, JPMorgan Chase & Co.’s Marko Kolanovic, who has been Wall Street’s most vocal optimist this year, said that he expects 2023 to be “a more challenging earnings backdrop relative to current expectations.”