P 500 is headed sharply lower as the year progresses, especially if the US economy enters a recession, according to Morgan Stanley’s chief equity strategist Mike Wilson.
Morgan Stanley says investors should underweight discretionary and tech hardware, while overweight utilities, health care and real estate. It’s neutral on everything else.“While acknowledging the poor performance in equities year-to-date, we do not think the bear market is over if our earnings forecasts are correct.
“From there, we think prices will recover to our base or bear case June 2023 targets. In the very near term, if back end rates fall, stocks may hold up or even rally until later this month when QT potentially increases and earnings estimates are likely revised lower.”In terms of recommendations, Morgan Stanley says investors should underweight discretionary and tech hardware, while overweight utilities, health care and real estate. It’s neutral on everything else.