BUY THE DIP AFTER MOODY’S DOWNGRADE: MORGAN STANLEY’S WILSON
Morgan Stanley’s Michael Wilson sees the recent U.S. stock selloff after Moody’s credit downgrade as a buying opportunity, driven more by interest rate fears than fundamentals.
He notes that Moody’s is the last major agency to downgrade U.S. debt—following moves that began back in 2011. Rising bond yields, especially if the 10-year tops 4.5%, could increase pressure on equities.
Despite concerns, volatility eased after a surprise U.S.-China trade deal, which cut effective tariffs from 145% to 30%. However, further market gains depend on earnings strength. Without rate cuts, EPS growth must carry the rally past 6100.
If yields rise above 4.5%, Morgan Stanley expects a modest 5% valuation pullback—but would view that as a buying chance. They favor cyclical sectors like Industrials, and remain cautious on Consumer Discretionary and Staples.
BUY THE DIP AFTER MOODY’S DOWNGRADE: MORGAN STANLEY’S WILSON
Morgan Stanley’s Michael Wilson sees the recent U.S. stock selloff after Moody’s credit downgrade as a buying opportunity, driven more by interest rate fears than fundamentals.
He notes that Moody’s is the last major…
— *Walter Bloomberg (@DeItaone) May 19, 2025