Stock market outlook: S&P 500 could fall 22%, Morgan Stanley says

Investors should brace for an much bigger decline in the US stock market than they are expecting for 2023, Morgan Stanley told clients Monday.

"Our concern is that most are assuming 'everyone is bearish,' and, therefore, the price downside in a recession is also likely to be mild . On this score, the surprise might be how much lower stocks could trade if a recession arrives," wrote Michael Wilson, chief US equity strategist at Morgan Stanley, in a note.

. A slide in bond yields after separate services-sector data from the Institute for Supply Management also contributed to sending stocks higher Friday. However, this"ignores the ramifications of falling prices on profit margins, which is likely to outweigh any benefit from the perceived Fed dovishness equity investors are dreaming about later this year," said Wilson.

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Morgan Stanley’s Mike Wilson warns U.S. stocks could slump another 22% if recession arrives in 2023U.S. equities could face a sharper-than-expected selloff in 2023 from a recession shock that could push stocks down another 22% from the current levels,... Many of these same voices who were predicting a recession for 2022, are now saying 2023 or 2024. Comes across as moving the goalposts. Not sure what the motivation is. Just because you say something doesn't mean it will come true. Valuations have already been adjusted down significantly. Speculation on the S&P 500 nadir is nothing more than a best guestimate .
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