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Market under pressure: Morgan Stanley warns of severe correction!
Morgan Stanley's Mike Wilson warns of a possible stock market correction due to trade conflicts and liquidity problems.
Market under pressure: Morgan Stanley warns of severe correction!
On October 24, 2025, Mike Wilson, Chief Investment Officer and Chief US Equity Strategist at Morgan Stanley, warns of a potential stock market correction that could loom in the near future. According to Wilson, there are two main factors that could lead to this market nervousness: First, the escalating trade tensions between China and the US, which are approaching a crucial point. On the other hand, the stress situation in the financing market, which was discussed by the Chair of the Federal Reserve, Jerome Powell. These circumstances could mean that bank reserves may not be sufficient to provide the required liquidity.
Wilson predicts a possible correction of up to 10%, but he does not expect markets to return to April's low levels. He rendered an outlook that suggests the Federal Reserve may begin ending quantitative tightening (QT) sooner than expected, particularly given the signs of stress noted in the financial market. The CIO points out that a Fed rate cut is expected to have some positive effects on various stocks, especially those that benefit from loose monetary policy.
Expectations regarding the Federal Reserve's interest rate policy
Wilson expects the Federal Reserve could cut interest rates significantly if labor market data shows weakness. This move could benefit stocks in areas such as housing, consumer staples and durable goods where there is pent-up demand. The prospect of interest rate cuts holds potential for a market recovery, provided the economy gives the appropriate signals.
In summary, Wilson's analysis suggests that both geopolitical tensions and internal economic challenges can put pressure on markets. While many investors are nervous about what lies ahead, the Federal Reserve's response to the labor market could be crucial to future market performance.
Wilson's current views provide valuable insight into how investors can prepare for the uncertainties ahead. The factors listed are not only crucial for short-term market movements, but could also significantly influence long-term investment decisions.