Bull Market Keeps an Eye on the Fed

Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist, discusses the current stock market correction, attributing it to the Federal Reserve's monetary policy and its impact on liquidity and interest rates. He notes that while the S&P 500 has seen limited downside, broader market damage is more significant, with many stocks experiencing substantial drawdowns. Wilson suggests that this weakness indicates the correction is nearing its end for weaker market segments and reiterates his bullish 12-month outlook for the S&P 500, anticipating more aggressive Fed action and a "rolling recovery" thesis. He advises investors to use the near-term weakness to reposition portfolios into sectors and stocks poised to benefit from expected Fed rate cuts and improved liquidity, particularly small/mid-cap stocks and consumer discretionary goods.