Morgan Stanley’s Wilson Predicts Choppy Start, Brighter Second Half for 2025

Morgan Stanley’s Chief US Equity Strategist, Mike Wilson, forecasts a volatile first half of 2025, with recovery prospects improving in the latter half. Speaking to Bloomberg Television, Wilson noted that recent stock and bond declines, driven by inflation and interest rate concerns, could deepen but likely won’t match the severity of 2022's downturn.

Wilson identified tariffs as a key area of focus for equity investors due to their potential impact on earnings and growth. He also highlighted taxes as a factor that could influence market conditions, particularly questions surrounding the extension or modification of current tax cuts. While tax developments may take time, Wilson expects significant updates on tariffs within the next two months.

Despite the anticipated turbulence, Wilson remains optimistic about certain sectors. He is bullish on financials, citing potential deregulation and increased demand for mergers and acquisitions. Energy, commodities, and materials are also areas of opportunity, with Wilson emphasizing their role in building data centers and infrastructure. He sees these sectors as undervalued by the market.

Wilson’s outlook suggests a challenging but potentially rewarding year for investors, with the second half of 2025 holding promise if key policies align.