Morgan Stanley CIO Mike Wilson says the market's correction, which began in June, is 80 to 90 percent done and advises investors to stay with quality leaders.
Wilson says the S&P 500 valuation multiple has fallen almost 20 percent from a year ago, now trading at 18 to 19 times earnings versus 23 times in October 2025.
Wilson argues the midterm elections are unlikely to reshape legislation, since most election-related uncertainty is already priced in and big policy shifts usually come with presidential races.
Morgan Stanley's Wilson Says the Correction Is Nearly Over
Mike Wilson argues the stock market's correction is nearly over and a bull market into 2027 is ahead. The weakness since June came from a narrowing market, and election nerves added to it. Valuations have already fallen from 23 times earnings to 18 to 19, so slower growth is largely priced in, and investors should hold quality leaders.
Takeaways
The correction is mostly done beneath the surface. Wilson says an underlying correction began in June, when Morgan Stanley saw a mid-cycle transition after the earnings-driven broadening of early 2026. He puts it 80 to 90 percent done, calls it the ninth inning, and expects a bull market into 2027.
Stay with quality leaders, not just megacaps. Wilson advises owning the leaders, which he defines as quality stocks and not only the Magnificent Seven. The market turned very narrow after the broadening paused, and corrections tend to end with the quality index getting hit.
Midterm nerves, not the result, weighed on stocks. Wilson argues the past month's weakness reflects uncertainty and tension before the election, not who wins or by how much. He says most of it is priced in, and legislation rarely shifts much after midterms because big changes come with presidential elections.
Valuation has already absorbed slower growth. The market traded at 23 times earnings in October 2025 and now trades at 18 to 19. Wilson says the multiple need not fall much further, because the market already discounts deceleration, and the S&P 500 multiple is down almost 20 percent from a year ago.
A growth scare is possible but premature to call. Hosts pointed to tough earnings comparisons next year. Wilson says a lower multiple can absorb a slowdown. A year ago most economists were bearish despite fiscal stimulus, and he calls forecasting a recession or growth scare now way premature.
Buy and hold still works through index rotation. Answering Whitney Tilson's regret over never owning the Magnificent Seven, Wilson says stocks generally rise over time and the S&P 500 regulates itself as names rotate. The last 10 to 15 years were unusual, driven by monopoly-type businesses.
Much of the post-COVID gain is inflation. Wilson says a lot of the stock market's rise since COVID reflects inflation, which Morgan Stanley has written about extensively. The economy is nominal, so he questions whether investors are really getting ahead or just keeping up.
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