This article first appeared on GuruFocus .
Morgan Stanley's chief U.S. equity strategist, Mike Wilson, expects another temporary pullback that could take the S&P 500 about 9% below its record, to 7,100, before a rebound to 8,000, according to a Sunday Bloomberg News interview.
He cited political uncertainty, concerns over artificial intelligence spending and tighter liquidity. Wilson said a correction beneath the surface has been underway for months.
A broader recovery may follow the November midterm elections, he said. Morgan Stanley research shows U.S. stocks rose in the six- and 12-month periods after every midterm since 1950, though the war in Iran and uncertain government policies could complicate that pattern.
Political opposition to data-center construction and added regulation could limit AI infrastructure growth, Wilson said. Some of that resistance might fade after the elections.
He voiced limited concern about the surge in stock and debt sales funding AI investment and mergers, saying strong economic growth is absorbing the capital.
Higher borrowing costs hit weaker companies hardest, which supports a preference for higher-quality firms, he said. Wilson expects capital-raising pressure to ease over the coming month.
