Morgan Stanley: The correction in the US stock market is nearing its end

Analysts at Morgan Stanley estimate that the correction in the US stock market may be nearing its end, with the midterm elections on November 3 potentially removing uncertainty and leading to a recovery. The bank maintains its S&P 500 target at 8,000 points but sees a risk of a temporary decline to 7,100-7,200 points.

Analysts at Morgan Stanley, led by Michael Wilson, estimate that the current correction in the US stock market may be approaching its final stages. The midterm elections scheduled for November 3, along with other developments, could pave the way for a market recovery. Wilson notes that since June, the market has been adjusting to a new phase in the economic cycle, with a slowdown in the Federal Reserve's balance sheet growth, tightening capital availability, and political uncertainty contributing to weakness. The bank maintains its S&P 500 year-end target at 8,000 points but sees a risk of a near-term decline to 7,100-7,200 points. Wilson identifies three factors that could bring the correction to an end: concerns in the AI sector, the midterm elections, and tightening financial conditions due to interest rate hikes and rising energy prices. According to him, liquidity is the biggest risk that could lead to a final market low.