Morgan Stanley Analyst Declares the Bear Market Has Begun

Anyone keeping an eye on the stock market over the past week or two is surely seeing red — literally. Following a series of selloffs, the markets have given back all of their 2018 gains so far. Additionally the Nasdaq has been struggling as big tech stocks like Apple, Amazon, and Facebook continue to slide (although they’ve seen a small bounce so far today). So has the controversially-crowned longest bull market in history come to an end? As CNN Business reports, one Morgan Stanley analyst has declared it so.

In a report to clients sent earlier this week, Morgan Stanley equity strategist Michael Wilson asserted that “We are in a bear market.” Pointing to the economy’s strong by decelerating growth, Wilson concluded, “While 2018 is clearly not a year of recession, the market is speaking loudly that bad news is coming.” Interestingly it’s not even necessarily bad news that’s sending individual stocks south as some slumping companies have even exceeded earnings expectations. This phenomenon led Wilson to write, “In our view, when stocks sell off on good news, that’s a bear market.”

Despite Wilson’s strong warning — timed to a turbulent week for the market — the declaration may still be premature. CNN Business notes that, as rocky as the past week or so has been, the S&P 500 is only down 9% from highs recorded in September. That’s significantly shy of the 20% it would have to dip before it officially reached bear status. At the same time, Morgan Stanley rebuts that 40% of S&P 500 stocks have fallen below that 20% threshold, potentially indicating a larger change in course.

Of course not all analysts are on board with Wilson’s conclusion. In fact Goldman Sachs chief U.S. equity strategist David Kostin predicted last week that the S&P 500 would close out the year at 2850, which would mark a 6% improvement over its current level. Meanwhile Neuberger Berman’s multi-asset chief investment officer Erik Knutzen wrote this week that, “Volatility is not the same as a sustained bear market,” also noting that market corrections “rarely” become bear markets outside of a recession.

Given the volatility that’s hit the market in recent days, it’s easy to think that things may be taking a turn. However analysts can argue their side until their blue in the face — at the end of the day, it’s the numbers that matter. To that point, despite the occasional bucking throwing some investors off, the bull market rides on for now.

For those stock market investors, just hope for a better end of the year or 2019. after all stcks are constanly moving.

Comments are closed.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Marqeta Expands Credit Program with New APIs and More

A FinTech that specializes in creating credit card experiences is rolling out some new features. This week, Marqeta announced what it calls a "significant expansion" of its credit platform. This includes more than 40 new credit APIs that will further help clients craft and launch their own credit card products. Additionally, the company notes an updated intuitive dashboard. Using this platform, businesses can create unique card options that can not...

PayPal Launches Small Business Credit Card with Flat 2% Cashback

The popular platform PayPal is rolling out a new product built specifically for small businesses. Today, the FinTech announced the launch of The PayPal Business Cashback Mastercard. The new card will be issued by WebBank and marks the first time PayPal has offered a business credit card. With the PayPal Business Cashback card, business owners will be able to earn 2% cashback on all purchases. This earning rate is not...

Wells Fargo Unveils New Autograph Rewards Visa Card

A new rewards credit card is on the way from Wells Fargo. Today, the bank introduced its Autograph card, which expands the company's refreshed card portfolio. In terms of rewards, the Wells Fargo Autograph Card will earn 3 points per dollar spent in a number of categories. These include restaurants, travel and transit, gas stations, select streaming services, and phone plans. All other purchases will earn 1x points. Beyond the...