Morgan Stanley CIO Mike Wilson says he’s hoping for a pullback—but not because he’s bearish. Speaking on Bloomberg TV Thursday, Wilson said a 5% to 10% tariff-related drop in stocks this quarter would present a clear buying opportunity for long-term investors.
Wilson is calling this the early stage of a new bull market. He sees the S&P 500 climbing to 6,500 by year-end, but he expects the ride to be volatile. In his view, short-term market weakness tied to trade headlines is not just likely—it’s healthy.
“I’m hoping we get a pullback to some degree,” Wilson said. “A lot of clients are looking for a reset, and this would be a good setup.”
Wealth managers and RIAs navigating client portfolios through macro noise may find Wilson’s bullish thesis compelling. He argues April’s selloff—driven by election risks, geopolitical stress, and the so-called Liberation Day panic—was the definitive bottom. Since then, he’s seen evidence that markets are entering a new growth phase.
“This is what the beginning of a bull market looks like,” he said. “It’s explosive and hard to chase—momentum takes over before many investors have time to reallocate.”
One of Wilson’s top signals is earnings revision breadth, a measure of how many analysts are raising versus cutting profit forecasts. That figure has made a sharp turnaround: in April, it was -25%. As of mid-July, it's climbed to +3%—a significant improvement that he says reflects companies’ ability to weather tariff headwinds.
“This recovery is being driven by fundamental earnings strength,” Wilson said. “Companies are finding ways to offset higher input costs. Tariffs are being mitigated.”
Financials, in particular, are showing strong earnings momentum, and Morgan Stanley remains overweight the sector. Wilson also believes that large-cap companies with pricing power will be better positioned to pass costs through to consumers, avoiding margin compression.
Still, he expects the third quarter to bring more clarity—and more market churn—as tariff costs flow through the economy. Inflationary pressures are already picking up: June’s CPI report came in hotter than expected, a signal that tariff-related pricing may be making its way into the data.
“Inflation is perking up again, and we think more of it is coming,” he said. “Smaller companies will be more vulnerable.”
That’s not enough to shake his broader thesis. Despite looming risks, Wilson believes the market’s foundation is strong: improving earnings, solid liquidity, and resilient consumer spending. His advice to clients: stay focused on the fundamentals, not the headlines.
“This is one of those environments where you need to think like a portfolio manager, not a trader,” he said. “Volatility is your friend right now.”
For advisors managing client concerns around trade policy, inflation, or election-year risk, Wilson’s perspective offers a framework: use volatility strategically. Look for opportunities in sectors with strong revisions, pricing power, and exposure to long-term growth trends.
Bottom line: If markets sell off in the coming weeks, Morgan Stanley sees it not as a threat—but as an entry point.
