Morgan Stanley has a blunt message on S&P 500

Morgan Stanley strategist Michael Wilson argues the S&P 500 is carving out a low within a bull-market correction after hitting the bottom of the firm’s 6,300–6,500 correction target. He highlights an 18% decline in the index’s forward P/E from its peak while price decline has been contained to under 10% because earnings growth is accelerating (median S&P EPS growing in double digits). MS sees risks from higher yields and bond volatility as the main obstacle, but views private credit and AI disruption as priced in rather than systemic. The bank recommends a barbell positioning—cyclicals (financials, industrials, consumer discretionary) and selected growth/hyperscalers—and warns a retest is possible. Overall, Morgan Stanley’s note is constructive, framing the move as a bull-market correction rather than the start of a bear market.