Morgan Stanley’s Wilson Says S&P 500 Risks 11% Drop on Trade War

US stocks are at risk of sinking as much as 11% if trade tensions between the US and China aren’t resolved before a November deadline, according to Morgan Stanley’s Michael Wilson.

The bank’s chief US equity strategist said the market was poised for a pullback given elevated investor exposure and high valuations, while Friday’s trade-war escalation “was unexpected by the consensus, and us.” Wilson has maintained a bullish view on US stocks this year and was among the few strategists who correctly predicted a robust recovery following April’s tariffs-fueled selloff.

“If associated trade uncertainty/volatility continue into early November, we ...