MS Analyst: Sees New S&P 500 Losses After Rally

Bloomberg headline: Morgan Stanley’s Wilson Sees New S&P 500 Losses After Bear Rally

* S&P 500 still not priced for earnings, macro slowdown: MS

* Strategist sees technical support for index close to 3,400

The S&P 500 surged on Friday after nearing a 20% drop from peak as market participants were lured by more attractive valuations. But the benchmark still marked its sixth straight week in the red – the longest such decline since 2011-- as investors worry a combination of surging inflation and hawkish central banks will spark a sharp economic slowdown.

While some strategists believe the selloff in US equities has potentially reached a floor, Wilson continues to be among the most prominent bears, saying the S&P 500 is still not fully priced for the slowdown in both corporate earnings and macroeconomic indicators.

Although his base case doesn’t foresee a recession, Wilson notes that “the risk of a recession has gone up materially. That is just another reason why the equity risk premium is too low, and stocks are still overpriced in our view.”