Morgan Stanley Warns of S&P 500 Correction Amid U.S.-China Tensions
Morgan Stanley analysts have shifted to a bearish stance on the S&P 500, predicting a potential 11% decline to 6,027 if market volatility persists into November. The warning follows last week's sharp 2.7% drop—the index's worst single-day performance since April—triggered by escalating U.S.-China trade tensions and new tariff measures.
Tech giants Apple and Nvidia, both heavily exposed to China, led the downturn. Their declines could Ripple through smaller S&P 500 components. Analyst Mike Wilson cites overextended valuations, crowded positioning across retail and institutional investors, and unfavorable seasonal trends as compounding risks. "Trade escalation served as the catalyst for the weakest index-level performance we've seen in months," the firm noted.
