S&P 500 rebounds 5%, is the super cycle becoming unstable? Analysts warn that the top has been reached, but Morgan Stanley still calls for a 12% increase

After a brief euphoria at the market open in June, the U.S. stocks have been declining steadily. The S&P 500 index hit a high of 7,620 points on June 2nd, and has since retraced nearly 5%. Investors' faith in the "perpetual bull market" in U.S. stocks is beginning to waver. From cycle analysis and institutional research reports to KOL warnings, analysts are divided into three camps: bearish, bullish, and neutral regarding the June market trend.
(Background recap: U.S. stocks experienced a bloodbath with the Dow plunging 953 points, Bitcoin holding steady at 61k USD, fear index at 12, and single-day liquidation reaching 400 million USD)
(Additional background: The Federal Reserve's mouthpieces warn that the May CPI report does not support rate cuts! The Fed's focus shifts back to "whether to restart rate hikes")

Table of Contents

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• Research institution FSC issues warning
• Morgan Stanley bullish, Fidelity cautious
• Herman Jin focuses on semiconductor "low PE bubble"

Key Summary

• The S&P 500 has retraced nearly 5% from its high of 7,620 on June 2nd, shaking faith in the "perpetual bull market"
• FSC cycle analysis warns of downward pressure from June to October-November, strongest in tech and semiconductors
• Morgan Stanley still expects the S&P 500 to rise 12% in the next 12 months; Fidelity describes the pullback as seasonal adjustment

June's U.S. stocks seemed to be ignited first and then cooled down. The S&P 500 surged to a high of 7,620 on June 2nd, then declined steadily, currently down nearly 5%. This brief pullback in just over a week has prompted many investors to reassess the so-called "perpetual bull market" curve they once believed in.

The question is: is this a normal pause in a bull market, or the beginning of a larger correction? Analysts' opinions are highly divided.

Research institution FSC issues warning

The veteran cycle research organization Foundation for the Study of Cycles (FSC) recently issued a clear warning in its latest podcast. FSC pointed out that, as of around June 8, 2026, multiple medium- and short-term cycles of major U.S. stock indices are highly synchronized, forming what is called a "top cluster."

What does this mean? FSC expects that starting in June, U.S. stocks will face downward pressure from late summer into fall (extending into October and November), with the strongest synchronized cycles in tech and semiconductors. Technically, these indices also show Cyclic RSI divergence signals. FSC advises short-term caution, watching for volatility or corrections. The only exception is financial stocks, which remain in a bullish cycle.

Morgan Stanley bullish, Fidelity cautious

Contrasting FSC's caution is Morgan Stanley's structural optimism. In a mid-term research report released in mid-May, Morgan Stanley believes that, benefiting from strong earnings growth, U.S. stocks will lead the global market, with the S&P 500 expected to rise 12% over the next 12 months.

However, Morgan Stanley also warns of two variables: first, as companies borrow for AI investments, increased corporate bond issuance could pressure credit markets; second, the slowdown in inflation and expectations of lower U.S. interest rates in the coming months may weaken the dollar, and a true recovery might only start around 2027.

Fidelity's research report characterizes this pullback as "normal." Fidelity points out that recent geopolitical conflicts, rising oil prices, and overheated inflation data have pushed up yields, causing tech stocks and indices to retreat. The S&P 500 and Nasdaq have declined noticeably, with semiconductors and AI-related stocks under pressure, and the VIX volatility index rising in tandem. However, given that June's historical performance in the U.S. stock market has been generally flat, Fidelity considers this to be a normal profit-taking or seasonal adjustment.

Herman Jin focuses on semiconductor "low PE bubble"

The most cautious view comes from well-known U.S. stock KOL Herman Jin, who continues to warn of an overlooked risk in the AI bull market: the "low PE bubble" in semiconductors.

Herman Jin warns that the current market's optimistic pricing of "model revenue and capital expenditure matching" is unrealistic. In the short term, diversified models may erode the original growth expectations, and this competition will ultimately reshape the industry through cost restructuring, further exacerbating wealth concentration.

Frequently Asked Questions

Why did the S&P 500 decline in June?

The S&P 500 retraced nearly 5% from its high of 7,620 on June 2nd, mainly due to geopolitical conflicts, rising oil prices, and overheated inflation data pushing up yields, which pressured tech and semiconductor stocks, with the VIX volatility index rising simultaneously.

What are Morgan Stanley and Fidelity's outlooks on U.S. stocks?

Morgan Stanley is optimistic about earnings growth, expecting the S&P 500 to rise 12% in the next 12 months; Fidelity views this pullback as a normal seasonal adjustment and profit-taking, and neither has turned bearish yet.