Morgan Stanley chief investment officer Mike Wilson was once the only strategist on Wall Street bearish enough to predict the S&P 500 would fall to 3,900 by the end of the year. Now as the S&P 500 lingers around 3,950 and Wilson’s predictions become a reality, the veteran investor is predicting things will fall by a lot more.
Wilson, who also serves as Morgan Stanley’s chief U.S. equity strategist, is warning investors that U.S. companies will unleash a trove of downward earning revisions in the first quarter of next year which will send stocks down another 24% in early 2023.
“You should expect an S&P between 3,000 and 3,300 sometime in probably the first four months of the year,” Wilson said on CNBC’s Fast Money on Tuesday evening. “That’s when we think the deacceleration on the revisions on the earnings side will kind of reach its crescendo.”
Wilson’s prediction of the S&P 500 at around 3,000 would imply the benchmark index shedding a quarter of its value from its close on Tuesday evening at 3,957.62. “The bear market is not over,” Wilson said, adding, “We’ve got significantly lower lows if our earnings forecast is correct.”
While most other strategists struggled to predict the 17% fall in the S&P 500 over the last year, Wilson—who ranked No. 1 stock strategist in the latest Institutional Investor survey — said pricing the first half of this year had been relatively simple—he just had to be bearish and hold his position. The average target of CNBC’s Market Strategist Survey halfway through the year in June 2022 had strategists predicting the S&P 500 would increase from 3,750 to an average o