Morgan Stanley's Wilson Sees Market Correction Nearing End, S&P 500 Path to 8,000 by Year-End

Morgan Stanley's Michael Wilson said the bearish stock correction that began in June is in its final stage, with three key factors—AI capital spending concerns, U.S. midterm election uncertainty and Federal Reserve liquidity shifts—poised to mark a market bottom and set up a year-end rally in the S&P 500 toward 8,000. In a report dated Monday, Wilson said roughly 60% of Russell 3000 constituents have fallen more than 20% since the market-cycle transition began, with semiconductors hardest hit at 96%. Quality factor stocks have led during the shift. The S&P 500 traded near 7,688, within 2% of its early-October record high, while Wilson's near-term tactical downside target remains 7,100-7,200, a slight break below the 200-day moving average. Wilson said liquidity is the biggest risk and the key catalyst for a bottom, noting Fed Chair Kevin Warsh has roughly halved the pace of balance-sheet expansion while rates lag inflation. Morgan Stanley's sentiment indicator is neutral, and third-quarter earnings are forecast to grow 27% year over year.