Wall Street's Getting Nervous: Expert Warns Stocks Could Drop 25% If $150 Oil Scenario Slams Markets Hard

Group 1 - Morgan Stanley has downgraded global equities to "equal weight" from "overweight" and upgraded U.S. Treasuries and cash to "overweight" from "equal weight" due to the ongoing Middle East conflict [1] - The firm highlighted a significant 59% increase in Brent crude oil prices this month, surpassing gains seen during the 1990 Gulf War, with current trading at $115.03 per barrel [2] - A potential 25% reduction in global equity valuations is anticipated if oil prices remain around $150-$180 per barrel, leading to a downgrade of U.S. and Japanese stocks to "equal weight" [3] Group 2 - Despite the downgrades, U.S. stocks are still preferred over other regions due to higher earnings-per-share growth, with a shift in investor sentiment towards U.S. assets as a safe haven amid the conflict [4] - Economist Jeremy Siegel predicts a possible 10% market correction due to rising tensions and surging oil prices, although he does not foresee a major downturn for the S&P 500 [5] - Mohamed El-Erian indicated that the economic impact of the Middle East conflict has reached a critical level, with potential for further escalation if tensions persist [6] - Ed Yardeni warned that increasing chances of U.S. military involvement are creating market uncertainty, with the S&P 500 already down about 8.7% from its peak and a 15% correction being possible [7]