The change is official, and it is seismic. For years, Morgan Stanley strategist Michael Wilson stood as the market’s fiercest skeptic, the lone bear who successfully navigated the 2022 decline. Now, Wilson has performed a full, high-conviction pivot. His latest forecast is aggressively bullish, and we believe this marks the beginning of a widespread shift in institutional thinking for 2026.
Wilson is advising clients to leverage the current market dip, projecting the S&P 500 Index will rally to 7,800 within the next twelve months. This implies 16% upside from current levels, putting his forecast among Wall Street’s most bullish calls. In our view, this sudden shift from a historically cautious voice is the clearest signal yet: we are on the verge of an overwhelmingly bullish consensus among strategists heading into 2026.
Wilson’s timing is intentionally paradoxical. The S&P 500 is only 2.7% from its record high close at 6,891, masking two months of dangerous deterioration in market breadth. Two-thirds of the largest 1,000 stocks have already suffered drawdowns exceeding 10%, and momentum is sagging, with only 40% of S&P stocks now trading above their 50-day moving averages. This underlying weakness traditionally leads to a much larger market decline.
Yet, Wilson declares the underlying weakness a positive sign. He argues the correction process is advanced in the majority of stocks, and that these companies are not leading the market lower; they are building a necessary base for the next powerful leg higher. His ultimate bet is simple: the current S&P volatility is closer to its conclusion than its start.
Investors should focus on three powerful catalysts: They are profit, policy, and a big payday.
Corporate profitability is on the rebound. Wilson forecasts 17% earnings per share growth for S&P 500 companies in 2026, significantly outpacing the current 14% consensus view. Crucially, Morgan Stanley’s models show that median stock earnings per share growth has already turned positive at 6%. This signals the end of the negative revision cycle that plagued the last two years.
Monetary policy should be a lifeline. Wilson believes the Federal Reserve will cut rates in early December, prompted by softening labor data. It is noteworthy that the Morgan Stanley team attributes the entire S&P pullback to concerns over interest rates, not to deteriorating earnings. A rate cut in December should unleash pent-up demand for stocks.
The final driver is the quiet but undeniable resurgence of the capital markets. Nasdaq chief executive Adena Friedman said on Monday that we are at the beginning of “Making IPOs Great Again.” Startups have raised a record $192.7 billion through the third quarter of 2025. Venture investors are now urgently seeking a payday. Relaunching the lucrative IPO market would be a powerful, out-of-consensus bullish reset, and supportive research from Wall Street will aid that effort.
Wilson’s call is a clear and powerful mandate for disciplined accumulation into weakness. He is urging investors to secure positions before the broader bullish sentiment shift takes hold. The current dip, driven by policy pressures rather than fundamental decay, offers a strategic entry point.
The story is not about Michael Wilson; it is about Wall Street. The most cautious voices are now embracing the bull case based on resilient earnings, imminent rate relief, and the structural need for new share issuance. We conclude that the window for hesitation is closing. Investors should treat this correction as the final buying opportunity before the investment analyst community completes its pivot and the market launches into its 2026 recovery.