Mike Wilson, the Chief U.S. Equity Strategist at Morgan Stanley, has indicated that the U.S. stock markets may experience a limited pullback in the third quarter. Speaking to Bloomberg, Wilson emphasized that the impact of trade tariffs would be particularly noticeable during this period. He pointed out that this effect could be temporary and manageable.
Impact of Trade Tariffs
According to Wilson, the third quarter could be a period where risks come to the forefront. He suggests that the effects of trade tariffs will be reflected in the costs of products sold by companies, potentially leading to an overall correction of 5-7%. This impact may be more pronounced for some companies. Nevertheless, Wilson believes that the effect will be temporary for the market, while the outlook for earnings growth by 2026 seems more favorable.
“The third quarter will probably be the period when risks are most felt, with the impact of trade tariffs reflected in sales costs. I don’t expect a large-scale correction. It could be around 5-7%. For some companies, this rate will be higher, but overall these effects are temporary. Also, the year 2026 currently looks more positive in terms of earnings growth.” – Mike Wilson (Morgan Stanley Chief U.S. Equity Strategist)
New Market Cycle and Expectations
Wilson opines that this pullback across the market will not last long. He observes that an upward trend is ongoing, signaling the beginning of a new bull market. While expecting the pullback to be brief and limited, Wilson acknowledges that an unexpected development could have a more pronounced impact. However, given the current indicators, he sees it unlikely that any correction would exceed 5-10%.
Mike Wilson: “This appears to be the start of a new bull market; the movement is rapid and accelerates beyond expectations. I think the pullback will be short and superficial. Perhaps a surprise development could lead to a more intense correction, but given the current picture, I don’t expect a drop beyond 5 or 10%.”
Assessment for Investors
Wilson mentioned that the potential price pullbacks in the third quarter could present buying opportunities for long-term investors. Despite the current positive market trend, it is anticipated some risks could be reflected in prices in the short term. However, optimism prevails for the long term.
Experts view these market corrections as natural and expected processes, advising investors to avoid emotional decisions. Growth expectations continue for next year and beyond, and these predictions could also be noted for the crypto market, as it progresses in parallel with the stock market.
Even with the temporary fluctuations that trade tariffs and macroeconomic developments might cause in the U.S. stock market in the third quarter, the overall outlook remains positive. Medium and long-term growth expectations persist, supporting a secure environment for investors.
