Morgan Stanley has warned that the S&P 500 could fall 7% to as low as 7,100 before the bull market resumes into year end, citing tightening financial conditions and materially higher energy prices. The firm said bond yields near 5% would make equities less attractive to investors, while rising oil prices would seep through much of the economy. Diesel prices are already feeding persistent inflation, and with 70% of U.S. freight moving by truck, that pressure is amplified. AI stocks face twin risks: a single major security breach or a pullback in corporate AI spending could erase the sector's market momentum. The firm said inflation is a more likely trigger for a selloff than an AI flameout, since capital for data centers remains available and AI demand momentum is unlikely to disappear in a quarter.
Morgan StanleyMorgan Stanley issues a bearish S&P 500 forecast; the article reports its market call, not a company-specific development affecting its own business.
