(Bloomberg) — A chorus of Wall Street strategists is warning about higher stock volatility, with Morgan Stanley’s Michael Wilson the latest to sound the alarm on economic growth worries.

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The strategist — among the most bearish voices on equities until mid-2024 — said he expects the S&P 500 (^GSPC) to drop as much as 5% to 5,500 points in the first half of the year due to the hit to corporate earnings from tariffs as well as lower fiscal spending.

While Wilson expects the benchmark to rebound to 6,500 by end-2025, “the path is likely to be volatile as the market continues to contemplate these growth risks, which could get worse before they get better,” he wrote in a note.

Other market forecasters including at JPMorgan Chase & Co. and RBC Capital Markets have also tempered bullish calls for 2025 as President Donald Trump’s tariffs stoke fears of slowing economic growth. The S&P 500 has dropped about 2% this year, with investors also questioning lofty technology valuations.

While none of the soothsayers has reduced their year-end targets yet, there’s a rising sense of uncertainty just three weeks after the S&P 500 hit a record. Historically, strategists’ consensus target has typically lagged behind actual market moves by about 60 days, according to an analysis from Piper Sandler & Co.

Wilson said the S&P 500 could sink 20% in the likelihood of a recession. “We are not there, but things can change quickly and so it’s useful to know the downside in the bear case to manage one’s risk,” the strategist added.

In the short term, however, Wilson said seasonal patterns bode well for earnings revisions as well as the S&P 500’s performance. Nomura Securities cross-asset strategist Charlie McElligott also sees lower odds of a market meltdown following a controlled decline in the benchmark index so far.

—With assistance from Jan-Patrick Barnert.

(Updates with broader context from first paragraph)

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