Morgan Stanley sees stock losses even if there’s no recession
BNN Bloomberg
One of Wall Street’s biggest bears says US stocks are likely to face more declines even if the economy manages to avoid a recession.
“Counter-trend rally may continue, but make no mistake, we don’t believe this bear market is over, even if we avoid a recession – the odds of which are increasing,” strategists led by Michael J. Wilson wrote in a note.
US equities have slumped this year, sending the S&P 500 Index into a bear market, on worries that scorching inflation and a hawkish Federal Reserve would tip the economy into a recession. According to Morgan Stanley, odds of a recession continue to increase, with the broker’s model showing 36 per cent probability in the next 12 months, while other warnings include rising jobless claims and falling job openings.
With the Fed expected to hike rates by another 75 basis points next week, investors are now turning to the corporate earnings season to see if margins have been resilient to the surge in prices and glum sentiment.
