Morgan Stanley: Unless the White House or the Fed takes action, the US stock market may fall another 8%

Odaily News Morgan Stanley strategists led by Mike Wilson believe that unless the White House abandons its tariff plan or the Federal Reserve sends easing signals, investors should prepare for another 7%-8% drop in the S&P 500. The next support level for the index - where buyers will enter the market - is currently at 4,700 points, they said in a note to clients early Monday. Valuations provide better support at this level, which is close to the 200-week moving average, a long-term indicator of technical trends, they added. Morgan Stanley had previously cited 5,100 points as a key level last Thursday, but the bank updated the support level on Monday in part because stock futures showed that the selling has not eased. S&P 500 futures indicate a drop of more than 3%, while Dow Jones Industrial Average futures plunged more than 1,200 points. The Trump administration showed no signs of backing down in comments last Sunday, while Federal Reserve Chairman Powell said on Friday that the Fed would take a wait-and-see approach due to the uncertainty of the economic impact of tariffs.