S&P 500 down another 1.0% on Ukraine crisis: what’s next?

Dow Jones, the S&P 500, and Nasdaq price forecast after last week gains

The S&P 500 index slid another 1.0% this morning on fears of war in Eastern Europe, but a Morgan Stanley analyst suggests investors ignore gloomy predictions related to the escalated geopolitical tensions.

Mike Wilson sees a quick 5.0% rally as likely

According to Mike Wilson, much of the negativity is already priced into the U.S. equities. Therefore, the market is unlikely to crash even if things flared up further between Russia and Ukraine. On the flip side, he expects a meaningful rally in case of de-escalation.

If we were to get some signs of a de-escalation in Russia/Ukraine tensions, it seems like a quick 5.0% rally is not out of the question.

Wilson agrees that Fed tightening continues to be headwind for 2022 but recommends that investors turn to fundamentals to navigate through the rising rate environment. A day earlier, Wharton’s Jeremy Seigel dubbed it a “big mistake” if the geopolitical crisis affects the pace of tightening.

Several other experts have a similar outlook

Interestingly, Wilson isn’t the only one who doesn’t see the Ukraine crisis as much of a threat. Fundstrat’s Tom Lee in his recent note also warned investors against panic selling and predicted U.S. equities will bounce back in the second half of 2022.

We think any panic around Russia-Ukraine will be short-lived. Hence, we won’t be sellers on this panic. Stocks often decline before the invasion, then rally when it actually happens. So, a buy the invasion policy seems appropriate.

One of the more bullish calls came from BMO Capital’s Brian Belski who sees the S&P 500 index ending the year at 5,300 level that represents a just under 25% upside from here.

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Source: https://invezz.com/news/2022/02/23/sp-500-down-another-1-0-on-ukraine-crisis-whats-next/