UBS Managing Director and Senior Portfolio Manager Jason Katz discusses Evergrande’s debt crisis, U.S. debt ceiling and the market selloff.<\/p>\n
The chances of a 20% or greater pullback in the S&P 500 are becoming more likely, according to Morgan Stanley. <\/p>\n
Strategists at the firm say there is growing evidence that the U.S. economy is slowing and that consumer confidence is waning. They laid out two near-term paths for stocks – the "fire" and "ice" scenarios. <\/p>\n
The "fire" scenario, which would result in a 10% correction, would occur should the Federal Reserve begin to remove monetary accommodation in response to an overheating economy, the strategists said.<\/p>\n
INVESTORS SWAP CASH FOR STOCKS IN RAPID FRENZY AHEAD OF FED MEETING<\/strong> <\/p>\n The "ice" scenario would be caused by earnings revisions and a deceleration in macro data points due to demand pull forward, supply chain issues and margin pressures, and generate a 20% or greater drop in the S&P 500. <\/p>\n "The ‘ice’ scenario is starting to look more likely," wrote Morgan Stanley strategists led by Michael Wilson. <\/p>\n The warning from Morgan Stanley comes as global markets were hammered Monday amid concerns that problems in China’s property sector could cause contagion all over the world. <\/p>\n Should the "ice" scenario play out, it would be the first bear market for the S&P 500 since the index plunged 34% from Feb. 19, 2020, through March 23, 2020, as COVID-19 resulted in the sharpest economic slowdown of the post-World War II-era. <\/p>\n The index had soared by as much as 102% off its pandemic low through Sept. 2 as investors celebrated the reopening of the global economy.<\/p>\n The unprecedented gains recently caught the attention of Wall Street, where strategists at Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc. and elsewhere warned about the potential for a stock market selloff. <\/p>\n\n\n
\n \nTicker<\/th>\n Security<\/th>\n Last<\/th>\n Change<\/th>\n Change %<\/th>\n<\/tr>\n<\/thead>\n \n SP500<\/td>\n S&P 500<\/td>\n 4357.73<\/td>\n -75.26<\/td>\n -1.70%<\/td>\n<\/tr>\n \n <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n