Morgan Stanley: Geopolitical shocks are the "final blow," and the sell-off is nearing its end

Morgan Stanley's chief U.S. equity strategist, Michael Wilson, released a report presenting a viewpoint contrary to the current market panic, suggesting that the current severe adjustment has matured in both time and space, and the market is approaching a bottom rather than the beginning of a decline.

Data shows that 50% of stocks in the Russell 3000 index have fallen more than 20% from their 52-week highs, and this proportion exceeds 40% in the S&P 500 index, indicating that half of the stocks are in a bear market, with the apparent decline underestimating the breadth of internal losses.

Wilson believes that the current sell-off is a "pullback in a bull market," which began last fall when liquidity tightened, well before the recent escalation of geopolitical conflicts. The current capitulation-style sell-off often marks an end rather than a beginning.

Unlike previous economic recessions accompanied by deteriorating earnings, current S&P 500 earnings are growing at a rate of 13% and are continuing to accelerate. Wilson's viewpoint is based on two major assumptions: the Iran conflict remains controlled, and oil prices stay below $100 per barrel. If oil prices break through and stabilize above $100, the market may evolve from a pullback into a more severe crisis.