The US stocks have been on the road to recovery in 2023, with S&P 500 experiencing an 8.20% jump year-to-date and closing the week at 4,137.64 points. However, the good times will soon end, according to Morgan Stanley’s chief US equity strategist Mike Wilson.
Speaking with Bloomberg TV, Wilson said that US stocks are heading towards a big drop later this year. He predicted a hit of more than 20% due to a combination of the poor earnings situation and the recent crisis in the banking sector.
“The earnings situation is way worse than what the consensus thinks, which is more in line with what we’ve been saying all along,” said Wilson. “And the banking stress only makes us more confident.”
According to Wilson, S&P 500 will hit lows between 3,000 and 3,300 points at some point in 2023 before bouncing back. His base case puts the index at 3,600 points to the end of the year, followed by the bull case at 4,200 and the bear case at 3,600.
“That path to 3,900 still goes through the low 3,000s ultimately,” he added.
It is important to note that Wilson isn’t the only one predicting a downturn for US stocks. Plenty of other top Wall Street strategists are believed to share his pessimism and expect sustained periods of a bear market.