Stock market strategy, outlook: Sell any stock bounces amid SVB fallout

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Sell any rally in the stock market as fallout from Silicon Valley Bank's failure isn't over after government intervention, Morgan Stanley's chief stock strategist says

on the sale of a bond portfolio, the value of which was hurt by the Fed's aggressive rate hikes. Fears that uninsured deposits were at risk triggered a bank run. in stocks spurred by falling growth in corporate earnings. He said Monday that most banks have been paying below-market rates because depositors have been slow to realize that better returns are available in other areas.

"But, that has changed more recently with depositors deciding to pull their money from traditional banks and putting it into higher-yielding securities like money markets, T-Bills and the like," Wilson said."We expect that trend to continue unless banks decide to raise the rate they pay depositors. That means lower profits and likely lower loan supply."

Wilson said the collapse of Silicon Valley Bank and surrounding events serve as"just one more supporting factor" for its outlook for negative earnings growth outlook. "[It] only exacerbates key headwinds like credit/money supply growth. In short, Fed policy is starting to bite, and it's unlikely to reverse even if the Fed were to pause its rate hikes or quantitative tightening," he said.

Wilson added:"[the] die is cast for further earnings disappointments relative to consensus and company expectations."

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