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Morgan Stanley’s Mike Wilson Predicts Stocks Are In For A "Wild Ride" in 2023

Derek Wolfe

Updated: December 2, 2022

wild ride 2023
Editor’s Note:

EDITOR'S NOTE: Amid Wall Street’s cheer following the Fed’s indication of a slower pace in rate hikes, Morgan Stanley’s Mike Wilson isn’t buying it. He forecasts a “wild ride” double-digit drop in the S&P 500 in early 2023. While investors seem optimistic about the next 12 months, he’s worried about what might take place within the next 3 to 6 months. It makes you wonder, what does he see that most investors on Wall Street don’t? And after the S&P’s astounding 4% jump to 4,080 yesterday following the Fed’s statement, why does the Morgan Stanley analyst think that the index will plunge to 3000 early next year?

Investors may be on the doorstep of a deep pullback.

Morgan Stanley’s Mike Wilson, who has an S&P 500 year-end target of 3,900 for next year, warns corporate America is getting ready to unleash downward earnings revisions that will pummel stocks.

“It’s the path. I mean nobody cares about what’s going to happen in 12 months. They need to deal with the next three to six months,” he told CNBC’s “Fast Money” on Tuesday. “That’s where we actually think there’s significant downside. So, while 3,900 sounds like a really boring six months. No... it’s going to be a wild ride.”

Wilson, who serves as the firm’s chief U.S. equity strategist and chief investment officer, believes the S&P could drop as much as 24% from Tuesday’s close in early 2023.

“You should expect an S&P between 3,000 and 3,300 some time in probably the first four months of the year,” he said. “That’s when we think the deacceleration on the revisions on the earnings side will kind of reach its crescendo.”

On Tuesday, the S&P 500 closed at 3,957.63, a 17% decline so far this year. Wilson’s year-end price target was 3,900 for this year, too.

“The bear market is not over,” he added. “We’ve got significantly lower lows if our earnings forecast is correct.”

Investors may be on the doorstep of a deep pullback.

Morgan Stanley’s Mike Wilson, who has an S&P 500 year-end target of 3,900 for next year, warns corporate America is getting ready to unleash downward earnings revisions that will pummel stocks.

“It’s the path. I mean nobody cares about what’s going to happen in 12 months. They need to deal with the next three to six months,” he told CNBC’s “Fast Money” on Tuesday. “That’s where we actually think there’s significant downside. So, while 3,900 sounds like a really boring six months. No... it’s going to be a wild ride.”

Wilson, who serves as the firm’s chief U.S. equity strategist and chief investment officer, believes the S&P could drop as much as 24% from Tuesday’s close in early 2023.

“You should expect an S&P between 3,000 and 3,300 some time in probably the first four months of the year,” he said. “That’s when we think the deacceleration on the revisions on the earnings side will kind of reach its crescendo.”

On Tuesday, the S&P 500 closed at 3,957.63, a 17% decline so far this year. Wilson’s year-end price target was 3,900 for this year, too.

“The bear market is not over,” he added. “We’ve got significantly lower lows if our earnings forecast is correct.”

Originally published on CNBC.

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