Multiple Wall Street institutions say the logic of the U.S. stock bull market remains unchanged; Morgan Stanley and Citigroup continue to be bullish on the future market.

BlockBeats News, June 8 — Driven by strong non-farm payroll data and a warming of expectations that the Federal Reserve will raise interest rates this year, the Nasdaq plunged 4.2% last Friday. The semiconductor sector led the decline, spurring volatility across global markets. However, Wall Street institutions such as Morgan Stanley and Citigroup believe this adjustment is a healthy correction and does not mean that the bull market has ended.

Morgan Stanley’s Chief U.S. Equities Strategist Mike Wilson said that the main driver of this round of selling is largely the semiconductor sector’s outsized gains earlier on and crowded trading. The Philadelphia Semiconductor Index has risen nearly 96% year-to-date, significantly deviating from its historical average and showing clear signs of being overbought. He believes the current pullback helps cool market sentiment, but it will not undermine the U.S. economy and corporate earnings fundamentals.

Wilson noted that the U.S. ISM Manufacturing Index rose to 54, reaching the highest level since 2022. Meanwhile, the three-month average of non-farm employment added 166,000 jobs, and both figures indicate that economic resilience remains strong. His team maintains its year-end target of 8,000 for the S&P 500 Index, and recommends that investors reduce crowded momentum trades and shift to sectors such as consumer discretionary, regional banks, and transportation.

At the same time, Citigroup raised its S&P 500 target for end-2026 from 7,700 to 8,100, and increased its 2026 earnings-per-share forecast for S&P 500 constituent stocks from $320 to $350. For the first time, it also provided a forecast of $400 in earnings per share for 2027.

Citigroup believes that the AI investment boom and corporate earnings resilience will continue to support performance in U.S. stocks. However, it also warned that after 2027, the growth rate of AI capital expenditures may slow, at which point the market could face valuation adjustment pressures. Still, this risk has not yet become the core trading logic for the current market.