Morgan Stanley's Michael Wilson forecasts S&P 500 correction before rally

Morgan Stanley's chief strategist Michael Wilson anticipates a 5–10% decline in the S&P 500 this quarter as US trade policies affect corporate earnings. However, he views this as a buying opportunity ahead of sustained market growth, noting that short-term weakness should give way to stock gains driven by improving profitability.

The S&P 500 has surged to record highs since April's trade tensions concerns subsided. Wilson maintains his bullish stance, citing strong earnings revisions and corporate adaptability to tariffs as key supporting factors.

While Wilson acknowledges that tariff impacts may pressure profit margins in Q3, he expects markets to quickly shift focus to 2026 growth prospects. Recent retail sales data and early earnings reports demonstrate the varied but manageable effects of trade policies.

The April downturn marked the bottom, and momentum is now accelerating, Wilson stated, recommending investors use any market pullbacks as entry points for US equities.