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One of the last big bears on Wall Street turns bullish on US stocks
(Bloomberg) — One of Wall Street’s most prominent pessimists just turned positive on the outlook for U.S. stocks.
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Morgan Stanley’s Michael Wilson now sees the S&P 500 rising 2% by June 2025, a major turnaround from his view that the benchmark index will fall 15% by December.
The strategist – whose pessimistic outlook for 2023 failed to materialize as markets continued to rise – finally relented and raised his target for the S&P 500 from 4,500 to 5,400 points. This catapults his forecast from one of the lowest on Wall Street to one that projects a new record for the index.
“In the U.S., we anticipate robust earnings per share growth along with modest multiple compression,” Wilson wrote in a note Sunday with his Morgan Stanley colleagues as they discussed the firm’s second-half views across various assets.
In recent months, Wilson has repeatedly maintained his 4,500 target for the S&P 500, even as the index has hit a series of record highs, and said in March that there was no justification for upgrading it given the absence of broad growth in stocks. profits. He said last month that he was holding off on making big decisions about the index’s direction given heightened economic uncertainty.
Generally, the bank expects a “sunny macro environment” that will support risk assets in the second half of the year, although Wilson reiterated his view that the broader outcome for the economy is becoming difficult to predict as data becomes more volatile.
Wilson’s 20% upgrade leaves JPMorgan Chase & Co.’s Dubravko Lakos-Bujas among the few prominent bears left on Wall Street. His forecast points to a drop of more than 20% in the S&P 500 by the end of the year. Strategists at Deutsche Bank AG also raised their target for the index for the end of 2024 to 5,500 from 5,100 on Friday.
The Morgan Stanley strategist recommends a bar approach to quality cyclical stocks and quality growth and maintaining long exposure to certain defensive areas such as consumer staples and utilities.
–With assistance from Sagarika Jaisinghani.
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