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Morgan Stanley chief U.S. equity strategist Mike Wilson said that a 10% stock market correction is highly likely, following macro factors including the U.S. presidential election, corporate earnings, and economic policy.
“Sometime between now and the election” in November, markets might see a 10% correction, as companies are losing pricing power and need interest rate cuts, Wilson said during a Bloomberg interview. “The third quarter is going to be choppy.”
The S&P 500 (SP500) is up 16.78% year-to-date, as it opened on Monday at an all-time high at 5,572.75, hitting its 35th closing record this year.
Long time market bear Wilson said that “your likelihood of upside from now until year-end is very low, much lower than normal.”
He said that the odds of the index closing the year higher than today are between 20-25%.
However, this pullback could create opportunities for investors to buy at the lows, since valuations are currently “unexciting” after the S&P 500’s (SP500) gains this year, he said, and added that investors should look at individual stocks — recommending high-quality growth — rather than indexes to make their bets.