Morgan Stanley Strategist Predicts U.S. Stocks Could Retrace 10%

Morgan Stanley strategist Mike Wilson said traders should prepare for a pullback in the U.S. stock market due to heightened uncertainty over the U.S. presidential election, corporate earnings and Federal Reserve policy. He predicted a 10% pullback between now and sometime during the U.S. election period is highly likely. He also said that "the third quarter will be more volatile" and that companies are losing pricing power and will need to cut interest rates. Scott Rubner of Goldman Sachs and Andrew Tyler of JP Morgan's trading arm also expressed concern about the future of the stock market. However, Wilson is not particularly worried about a pullback, which he believes could create opportunities for investors, as valuations are currently "lackluster" following the double-digit gains achieved by the SP 500 this year. He suggests that the best way to invest in the stock market right now is through individual stocks, not indices.