Waiting for the final drop? Morgan Stanley's Wilson: Regardless of the midterm election outcome, it may be a

Morgan Stanley chief U.S. equity strategist Mike Wilson said the equity correction that began in June is in its "final stage" and that Tuesday's midterm elections, regardless of outcome, represent a classic "clearing event" for stocks. He cited historical data showing large-cap stocks have gained roughly 15% (cap-weighted) to 16% (equal-weighted) in the six months after midterms since 1982, rising to about 22% over the following year. Wilson pointed to bottoming signals including 60% of Russell 3000 constituents falling more than 20% from June highs, the 10-year Treasury yield down nearly 40 basis points since late September, and the share of S&P 500 stocks above their 200-day moving average rebounding to 62% from about 42%. He argued a Democratic sweep, priced at 71% on Kalshi and 73% on Polymarket, is already discounted, while post-election risks include renewed conflict with Iran and new tariffs. Wilson also flagged a liquidity tailwind as the Treasury's cash balance (TGA) falls from about $1.05 trillion to roughly $850 billion by year-end, and said he favors beaten-down large-cap quality cyclicals over small caps, which need a larger rate decline to recover.