[Morgan Stanley: Half of Russell 3000 Constituents Have Entered a Bear Market, U.S. Bond Volatility to Determine Future U.S. Stock Trends] Odaily Planet Daily News – Morgan Stanley Chief Equity Strategist Mike Wilson stated in his latest report that although major U.S. stock indices remain near historical highs, there is significant internal market divergence. Among Russell 3000 constituents, 51% have fallen more than 20% from their June highs, while the median constituent of the S&P 500 is down 16% from its 52-week high. Market breadth has dropped to its lowest level since the bursting of the dot-com bubble, with a roughly 12% divergence between index prices and market breadth. Wilson believes that U.S. bond volatility will be the key to bridging this gap. Currently, the 10-year U.S. Treasury yield has risen to 5.25%, the MOVE Index has surpassed 100, while the VIX remains below 15. If bond volatility remains elevated, the S&P 500 could pull back by approximately 6% to around 7300 points over the next month. Conversely, if bond volatility subsides first, individual stock rebounds could drive market breadth to catch up with the indices. Wilson noted that the current market weakness is primarily reflected in valuation compression rather than a sharp decline in corporate earnings. At this stage, he favors high-quality large-cap stocks with improving earnings expectations.