Morgan Stanley warns the S&P 500 could fall 7% to 7,100 as bond yields near 5% make equities less attractive to investors. Diesel prices drive persistent inflation through the broader economy, with 70% of U.S. freight moving by truck amplifying the pressure. AI stocks face twin risks: a single major security breach or a pullback in corporate spending could erase the sector's market momentum.
Our analysts combed the entire stock market and named the ten best stocks to buy right now. Enter your email and see if any of your stocks made the cut. Morgan Stanley has warned that the market faces a 7% selloff.
"Should the correction in valuation take a turn for the worse in the near term due to a further tightening of financial conditions and/or materially higher energy prices, we think the S&P 500 could trade as low as 7,100 before the bull market resumes into year end." The reasons for the selloff are fair enough. One is that as some bond yields hit 5%, they will be more attractive than stocks. It would not take much of a dent in worry about AI stocks, in particular, to cause investor anxiety.
Another, broader reason is that oil prices will continue to rise. This is not just a problem for America's drivers, those who drive diesel-powered trucks, and those who use home heating oil. Petroleum is used across the manufacture of hundreds of products.
Eventually, oil's increase seeps through much of the economy. (One other factor is how long the oil shortage will last as the Middle East catastrophe continues.) There have been selloffs before in the last year. Optimism, particularly about AI's effects on the economy and tech earnings, has brought the market back. But AI is under siege for two reasons.
The first is a less dramatic outcome than "killing mankind." Short of that, it could seriously damage online security, the grid, or parts of the military. It would not have to be an apocalyptic event. 24/7 Wall St has helped investors make money for over two decades, and our top analysts just finished ranking the definitive Top 10 Stocks To Buy Now. Not the ten biggest companies.
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