There\u2019s growing concern that the U.S. may be headed for a recession, but Morgan Stanley\u2019s Mike Wilson has said that the economy was actually in a \u201crolling recession\u201d for the past three years.<\/p>\n
It\u2019s over now, and the epic stock market selloff in April, when President Donald Trump shocked investors with his \u201cLiberation Day\u201d tariffs, marked the end of a bear market, he told Bloomberg TV on Thursday<\/a>. <\/p>\n \u201cNow we\u2019re in a new bull market, and capital markets activity is just another sign that that analysis, or that conclusion, is probably correct,\u201d he added.<\/p>\n Wilson, who is Morgan Stanley\u2019s chief U.S. equity strategist and chief investment officer, said any volatility and consolidation along the way are normal, noting that it\u2019s actually preferable to a market that goes straight up like in 2020.<\/p>\n In fact, the stock market has seen some straight lines lately in form of a V-shaped recovery. At its lows in April, the S&P 500 had tumbled so precipitously and so quickly that it was down nearly 20% from its prior high. Since then, the index has shot up 30%, hitting fresh records and leaving it up almost 9% so far this year. <\/p>\n But Wilson predicted some stock market moderation in the third quarter, potentially offering a chance to double down on the rally.<\/p>\n \u201cI want to be very clear: it\u2019s still early in the new bull market, so you want to be buying these dips,\u201d he said.<\/p>\n Last month, Wilson said in a note that the S&P 500 could reach 7,200 by mid-2026, explaining that he is starting to lean closer to his more optimistic \u201cbull case\u201d scenario.<\/p>\n He cited strong earnings as well as AI adoption, the weak dollar, Trump\u2019s tax cuts, pent-up demand, and expectations for Fed rate cuts in early 2026.<\/p>\n Wilson\u2019s view is part of an increased sense of optimism<\/a> among other top Wall Street analysts as fears over tariffs ease with the signing of several trade deals. <\/p>\n Last month, Oppenheimer chief investment strategist John Stoltzfus hiked his S&P 500 price target for this year to 7,100 from 5,950, reinstating the outlook he initially made in December 2024.<\/p>\n If the S&P 500 hits 7,100 this year, it would represent a gain of about 21% for 2025, marking a third straight year with a surge of more than 20%. That hasn\u2019t happened since the late 1990s, when the U.S. economy and the stock market boomed.<\/p>\n Meanwhile, retail investors have relentless bought stocks whenever they have dipped, helping turbo-charge the market even as institutional investors have taken a less aggressive stance.<\/p>\n Buying the dip has paid off so well that it\u2019s actually getting harder to do as more investors try to get ahead of the crowd, fueling faster rebounds.<\/p>\n \u201cThe half life of dips is getting ever shorter,\u201d Steve Sosnick, chief strategist at Interactive Brokers, told CNBC on Tuesday<\/a>. \u201cAnd I think because people are so afraid of missing the dip, they basically rush in at the slightest sign of\u00a0one.\u201d<\/p>\n He cautioned against reflexively buying dips just because a stock is down, saying investors should instead be more judicious and apply some analysis to find real value.<\/p>\n Still, the risk is that dip-buyers \u201ccatch a falling knife\u201d in the process, leaving them with stocks that continue on a long-term decline. <\/p>\n \u201cThe market has a way of making the maximum number of people wrong at the most inopportune time,\u201d Sosnick said.\n<\/p>\n