Banking giant Morgan Stanley has made a bold prediction, suggesting that the S&P 500 is on the verge of carving out a major market bottom following a recent drop below the 5,000-point level. In an interview with CNBC, Mike Wilson, the Chief Investment Officer and Chief US Equity Strategist at Morgan Stanley, highlighted that the stock market likely experienced a capitulation event on April 7th, hitting a new low for 2025 at 4,835 points.
Capitulation is a phenomenon that occurs when investors succumb to extreme fear and panic, resulting in a rapid decline in prices. This often signals a potential market bottom as sellers exhaust their selling pressure. Wilson expressed his views on the current market situation, stating, “I think we’ve seen the worst of the momentum. We’ve probably made the momentum low, the capitulatory low for this correction. Wherever it’s going to end up being – whether it’s 20%, 25% [lower] – I think it’s going to be a lot of testing. The patient had a heart attack. Now the patient has to recover.”
Furthermore, Wilson indicated that the recent corrective move reflected recession fears being factored into the market. He anticipates that the S&P 500 will trade within a wide range, noting that a resumption of the uptrend will require investors to gain clarity on the future direction of the economy. He added, “[April 7th] was a clear capitulation day. That was the moment of recognition that, ‘Hey, we may be going over the edge here on the recession.’ And we priced a lot. 4,900 [to] 4,850 was a level that we’ve been searching for, and we found that level. We had a 1,000-point rally in two days. So now we’re stuck in a range, now the markets are going to do what they always do: they’re going to be volatile until we have clarity on how deep this growth slowdown is going to be and what does a recovery look like coming out of that.”
As of the latest closing on Tuesday, the S&P 500 is hovering around 5,386 points, showcasing signs of potential stabilization in the market.
For more updates and analysis on financial markets, follow us on X, Facebook, and Telegram. Stay informed with email alerts directly to your inbox and keep track of price action. Explore The Daily Hodl Mix for a diverse range of content.
Remember, the financial market is ever-evolving, and it’s crucial to stay informed and adapt to changing conditions for successful investment strategies.
[Generated Image: Midjourney]