Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley, shared his expectations regarding a possible pullback in the stock market in Q3 2023.
Impact of Trade Tariffs
Wilson notes that the third quarter may become a time when risks come to the forefront. He states that the impact of trade tariffs will be reflected in product costs, potentially leading to an overall correction of 5-7%. According to his estimates, this effect may be more pronounced for certain companies. Nevertheless, he believes that this will be a temporary impact on the market, and the outlook for earnings growth by 2026 appears more optimistic.
New Market Cycle and Expectations
Wilson suggests that this pullback across the market will not last long. He observes an ongoing upward trend, signaling the start 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, based on current indicators, he sees it unlikely that any correction would exceed 5-10%.
Assessment for Investors
Wilson mentioned that potential price pullbacks in the third quarter could present buying opportunities for long-term investors. Despite the current positive market trend, some risks are anticipated to be reflected in prices in the short term. However, there is optimism for the long term. Experts view these market corrections as natural processes and advise investors to avoid emotional decisions.
Despite temporary fluctuations caused by trade tariffs and macroeconomic developments, the overall outlook for the stock market remains positive, supporting a secure environment for investors.
