One of Wall Street's most bearish strategists said U.S. equities are facing a wall of worry, which could fuel a sharp selloff in the near future.
Morgan Stanley's Michael Wilson, whose outlook for a market slump in 2023 has yet to materialize, sees the S&P 500 at risk of a near-term drawdown.
He expects the benchmark index to end this year at 3,900 — about 10% below Friday's close — before rising to 4,200 in the second quarter of next year.
"The headwinds significantly outweigh the tailwinds and we believe risks for a major correction have rarely been higher," Wilson said in a client note on Monday.
Morgan Stanley is sticking with an outlook for earnings that's below the market consensus, expecting S&P 500 EPS to be $185 this year compared with the average estimate of $220. Wilson said deteriorating pricing and top-line disappointment will drive the earnings misses.
