Morgan Stanley ($MS) Chief U.S. Equity Strategist Mike Wilson is telling investors to prepare for a choppy first half of the year in the stock market.
In an interview with Bloomberg Television, Wilson said he expects volatility in equity markets during the first half of 2025 before the situation improves in the second half of the year. Furthermore, Wilson said that a decline in stocks and bonds could worsen in coming months as traders assess the impacts of higher inflation and interest rates.
However, Wilson stopped short of predicting a bear market in 2025 and said he believes the decline in equities is unlikely to reach the extremes of 2022 as interest rates were being raised by the U.S. Federal Reserve. That said, Wilson stressed that the trade tariffs being proposed by incoming President Donald Trump could be bad news for the stock market.
Impact on Earnings
“We think the first half is going to be choppy,” said Wilson during the interview. He believes tariffs could have a negative impact on corporate earnings and growth in coming quarters. He added that there will be more clarity on tariffs once Trump takes office at the end of January, and that there should be “quite a bit” of information about tariffs in the next month or two.
As for pockets of the market that Wilson is bullish on, he sees opportunities in financials, energy, and commodities this year. Financial stocks, in particular, could be a good bet in 2025 due to a combination of deregulation and pent-up demand for capital markets activities such as mergers and acquisitions (M&A) and initial public offerings (IPOs), said Wilson.
MS stock has risen 43% in the past 12 months.
Is MS Stock a Buy?
Morgan Stanley’s stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on five Buy and 10 Hold recommendations issued in the last three months. The average MS stock price target of $129.08 implies 1.33% upside from current levels.
