Morgan Stanley Sees Stock Market Correction Within 30 Days Amid Rising Oil Prices

Morgan Stanley's chief US equity strategist Mike Wilson issued a warning about a potential stock market correction. He predicts that if oil prices continue to rise, it could lead to a drain on liquidity and trigger a market downturn within 30 days.

Wilson is concerned about the impact of high energy costs on the market, not artificial intelligence (AI). He noted that the US benchmark crude price has surged by nearly 80% this year and could reach $120-$140 per barrel, starving the market of cash.

Morgan Stanley is advising its clients to rotate towards companies that generate cash internally, rather than cutting equity exposure. The bank also initiated coverage on Coinbase (COIN) with a price target of $250, implying almost 43% upside from its current price of $175.26.

However, the impact of AI on the market may be limited to tech stocks alone, according to equal-weight S&P 500 data. The standard S&P 500 is weighted by company size, but an equal-weight version shows that non-AI companies have been performing similarly to those in the tech sector.