Morgan Stanley’s Wilson calls the midterms a clearing event and sees stocks higher whoever wins

Mike Wilson, Morgan Stanley’s chief stock-market strategist, said the midterm elections are a classic “clearing event”¹. In his view the winner of the midterms is going to be the US stock market⁶, and the vote is a positive event for equities regardless of outcome¹⁰.

Wilson said on Monday that the stock market correction that began several months ago is in its final stage². He has said the worst is almost over⁵, and he is reported as saying investors should buy the stock dip regardless of who wins⁹.

He also argued that AI risk needs to clear before any post-midterm rally in the S&P 500 begins². Wilson is Morgan Stanley’s head US equity strategist², and his election call does not depend on which party wins^6,10.

Why it matters to investors

Wilson’s call rests partly on history. Data going back to 1950 is on the side of equity investors six to 12 months after the midterms, he pointed out³.

Reports differ on his targets. One describes him as seeing the S&P 500 heading toward 8,000 regardless of how Tuesday’s vote plays out⁴. Another says he sees the index at 8,500⁵.

The near-term path is less smooth. Wilson expects another temporary pullback in which the S&P 500 could drop 9%⁷, falling toward 7,100 before a rebound⁸. This week brings Tuesday’s midterms and key tech earnings⁸.

His optimism stands against the mood among large investors. Positioning is already cautious: hedge funds have slashed equity exposure in the biggest de-grossing in nine years⁹.

What to watch

The first marker is the vote itself. Prediction markets run by Interactive Brokers signalled a blue sweep with a 71% probability, with Democrats at 74% in the Senate contest and the House “in the bag”¹¹.

A second is whether the AI risk Wilson flagged clears before any rally², a condition that sits alongside his view that the correction is near its end^2,5.

A third is the gap between the 7,100 downside he described⁸ and the upside targets of 8,000⁴ and 8,500⁵. Wilson has described the pullback as temporary, to be followed by a rebound^7,8.