Morgan Stanley Strategists Say U.S. Stock Sell-Off Was a Healthy Pullback, Maintain S&P 500 8,000 Target

Morgan Stanley strategists said last Friday’s U.S. stock sell-off driven by position adjustments was a healthy pullback. According to Odaily, a team led by Mike Wilson said in a research note that the decline was led by semiconductors and memory stocks, sectors that have posted significant gains so far this year. The team said hedge funds and leveraged exchange-traded funds had concentrated positions in these areas, contributing to a buildup of risk. The strategists added that if the current bull market continues through year-end, a market correction would be unavoidable and could be positive over the longer term. They maintained a base-case target of 8,000 for the S&P 500, implying about 8% upside from current levels. The team also forecast that corporate earnings will continue to strengthen with broader-based growth, and said macroeconomic data will keep supporting the market.