TechFlow, April 7 — According to Jinshi Data, Morgan Stanley strategists led by Mike Wilson said investors should prepare for a further 7%–8% drop in the S&P 500 unless the White House abandons its tariff plans or the Federal Reserve signals monetary easing.
In a report to clients earlier on Monday, they stated that the index's next support level—the point at which buyers are likely to step in—is now at 4,700. They added that valuations offer better support at this level, which is close to the 200-week moving average, a long-term technical trend indicator.
Last Thursday, Morgan Stanley had identified 5,100 as a key level, but the bank updated its support target on Monday, partly because stock futures indicated selling pressure had not eased. S&P 500 futures pointed to losses exceeding 3%, while Dow Jones Industrial Average futures plunged more than 1,200 points.
The Trump administration showed no signs of backing down in comments made last Sunday, and Fed Chair Powell said Friday that due to uncertainty about the economic impact of tariffs, the central bank would take a wait-and-see approach.
