Morgan Stanley: S&P 500 may fall to 3400 points and return to pre-pandemic levels

Morgan Stanley: S&P 500 может упасть до 3400 пунктов и вернуться к допандемическому уровню

In April, the broad market index S&P 500 fell by 8,8%, but only for the first 4 months of 2022 lost 13,3% is the worst result in recent 80 years. Morgan Stanley warned investors: In the near future, the index may fall by at least another 10%.

“The pandemic has not created real value for the economy”

According to the bank, macroeconomic factors threaten the US stock market: "We are thinking, what does S have&P 500 has the potential to drop to 3800 in the near term, maybe, and up to 3460, if expected profits fall due to fears of a recession".

3 May S&P 500 closes at 4175. And if the index drops to 3460, that is, still 17%, it will be at the pre-pandemic level. Morgan Stanley sees the logic in this, because “the pandemic has not created real value for the economy or most companies, but destroyed it".

Morgan Stanley names inflation and politics as key risks FED. The first did not allow investors to compensate for the rise in prices for goods and services through shares, how they calculated. The second one has been putting pressure on stocks with high multiples since November 2021. In March, the US Federal Reserve for the first time in 3 year raised the stake - on 25 basis points. And raise the rate immediately to 50 basis points the regulator may already at the meeting today, 4 May.

According to the bank, corporate profit growth slows faster, what investors thought: “The first quarter could be the last successful quarter in terms of profits, as high spending and recession risks weigh on future growth.”.

At the same time, Morgan Stanley does not rule out, that stocks can "rebound", although it's unlikely: “The market is currently so oversold, that any good news could lead to a sharp rally in a bear market. We can't rule anything out in the short term, but we want to make it clear: in our opinion, The bear market is far from over.

Total 4 months ago, when S&P 500 was at 4800, banks expected the index to grow in 2022 by an average of 5.5%. Then one of the most optimistic forecasts was given by Goldman Sachs - 5100 points. The bank later lowered its expectations to 4700. But Morgan Stanley was set up as bearish as possible at the beginning of the year. Back then, the bank was talking about falling to 4,400 points by the end of 2022..

  Deposit is on the spot

Morgan Stanley: S&P 500 может упасть до 3400 пунктов и вернуться к допандемическому уровню

Yield S&P 500 for January - April

1932 −28,2%
1939 −17,3%
2022 −13,3%
1941 −12,0%
1942 −11,9%
1970 −11,5%
2020 −9,9%
1973 −9,4%
1960 −9,2%
1962 −8,8%


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