Morgan Stanley believes that despite rising tensions between Russia and Ukraine, the stock market has digested a lot of bad news.

Mike Wilson, an analyst with Morgan Stanley and a well-known short seller on Wall Street, wrote in a research note on Tuesday that although the uncertainty was "very high", the market was already adjusting accordingly. Therefore, any relief is likely to bring good news to the market.

"if we see signs of easing tensions in Russia / Ukraine, a rapid rebound of 5 per cent does not seem impossible," the analysts predicted. "

Wall Street has been wrestling with how to deal with the crisis in Ukraine. Tom Lee, former chief equity strategist of JPMorgan Chase & Co and founder of Fundstrat, is a well-known bullish investor who believes that investors should not sell stocks during a "panic" because the stock market will rebound. Billionaire Mark Cuban also said that overseas conflicts will not force investors to leave the market because there is no better choice to get high returns. Goldman Sachs Group, on the other hand, predicts that if there is a direct conflict in Ukraine and Russia is subject to punitive sanctions, US stocks could fall by 6 per cent.

Morgan Stanley's report said that not all price movements can be attributed to the Russian-Ukrainian crisis, because the current environment is economic growth slowdown and Fed tightening policy.

Once the Fed starts tightening policy in March, it will be important for investors to return to fundamentals-"this should be the main driver of stock market returns in the coming months," the bank said. "

Morgan Stanley said earnings growth was particularly important, adding that sales and operating margins were also important determinants of stock returns.