Why Vanguard S&P 500 ETF (VOO) Is Up Today and Why Morgan Stanley Says the Worst May Be Over

Vanguard S&P 500 ETF (VOO) is climbing today as the broader market rebounds, with investors stepping back into equities after a period marked by elevated geopolitical tension, rising energy prices, and growing concern around the economic outlook. The shift appears to reflect a combination of easing fears around the Middle East conflict and a sense that recent selling had pushed valuations to more compelling levels, prompting buyers to return across large-cap names that make up a significant portion of the S&P 500. As those heavyweight stocks move higher, VOO follows, given its direct exposure to the index’s largest companies.

Meanwhile, Morgan Stanley strategist Michael Wilson is starting to see a more constructive setup forming beneath the surface, even after a volatile stretch for equities. Wilson argues that the market may already have absorbed a meaningful portion of the recent growth scare, pointing to the fact that valuations have compressed at a pace consistent with past slowdowns that did not ultimately lead to recession or sustained tightening from the Federal Reserve. In his view, this reset suggests that the correction phase could be entering its later innings rather than just beginning.

Wilson also highlights how current conditions differ from prior cycles when oil spikes derailed economic expansion, noting that earnings growth remains positive and is actually accelerating, which stands in contrast to earlier periods when profits were already deteriorating. That distinction matters, because it suggests that the market is not facing the same fundamental pressure that typically accompanies a downturn. The strategist further observes that the move in oil prices, while significant, remains more moderate on a year-over-year basis compared to past shocks that triggered deeper economic damage.

At the same time, Wilson points to market behavior that supports the idea that investors are not positioning for a severe slowdown, with defensive sectors failing to outperform and price action implying that disruptions in energy flows are more likely to be resolved than to spiral into a prolonged crisis. Wilson believes that “the cumulative probability of the paths to resuming tanker flow in the Strait is much higher than the recession probability,” reinforcing his view that the market is leaning toward stabilization rather than contraction.

Taken together, Wilson’s framework suggests that while risks remain present, particularly around interest rates and energy, the market may have already discounted much of that uncertainty. That perspective aligns with today’s rebound in VOO, where buyers appear willing to look past near-term volatility and focus instead on a scenario where growth holds up and earnings continue to expand.

A quick look at VOO’s three biggest holdings shows where the push is coming from, with its top names all moving higher. Nvidia (NASDAQ:NVDA) is leading the way, up about 4.66%, while Apple (NASDAQ:AAPL) is also in the green, gaining around 2.57%, and Microsoft (NASDAQ:MSFT) is up about 2.81%.

Is Vanguard S&P 500 ETF (VOO) Still a Buy Right Now?

Looking at the TipRanks ETF AI Analysis, the answer leans toward a Buy, although it comes with some balance. The model assigns VOO an “Outperform” rating with a score of 74 and a price target of $703, implying about 18% upside from current levels. That view is driven by the fund’s heavy exposure to high-quality tech leaders, which continue to deliver solid earnings trends and benefit from long-term growth areas like cloud computing and artificial intelligence. At the same time, the analysis does point out risks, particularly the concentration in large-cap growth stocks and sensitivity to valuation pullbacks, along with weaker signals from some holdings like Tesla and Berkshire Hathaway.

Disclaimer: The opinions expressed in this article are solely those of the featured strategist. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.