Morgan Stanley sees a possible 9% drop in the S&P 500 and sees a chance to buy later

The S&P 500 could fall about 9% from its last record, according to a projection from Mike Wilson, chief U.S. equity strategist at Morgan Stanley. According to InfoMoney, he speaks of “adjustment events” in the American stock market, with temporary drops in shares. The reading, however, is not limited to caution, as Wilson also sees the possibility of buying after these falls.

The target drop level cited by the strategist is 7,100 points, according to the report. The scenario combines a relevant decline in the index with the possibility of recovery, and not just an isolated alert.

Among the risk factors cited are the midterm elections in the USA. In the strategist's view, this political calendar can cause short-term movements in shares.

The second factor is concern about spending on artificial intelligence. The third is liquidity constraints. The list, according to the report, mixes a political factor, another linked to the technology sector and a market factor, which makes the picture more complex than a single variable.

For those following the US, the key is to separate the noise from the fit. Wilson's projection treats the falls as temporary, but the data collected does not provide a deadline for these movements.

What changes for the investor

If the projection is confirmed, investors who follow the Nasdaq and the S&P 500 tend to live with greater volatility in the American stock market for a period, with temporary drops followed by a possible resumption of purchases. The most useful thing is to monitor the three factors mentioned (elections, spending on artificial intelligence and liquidity) and evaluate how each one can affect the portfolio before making any decision. This article does not provide a purchase or sale recommendation or price forecast.

Automatically translated from Portuguese.