One of Wall Street’s most prominent ‘bears’ (pessimists or bears) has turned positive on the outlook for US stocks. Michael Wilson, Morgan Stanley’s chief investment officer, now forecasts that the S&P 500 index will rise 2% by June 2025, a big shift in his view from his previous thesis that the benchmark would fall 15%. for December.
The strategist, whose bearish outlook for 2023 failed to materialize as markets continued to rise, eventually relented and raised his value target for the S&P 500 to 5,400 points from 4,500. This catapults their forecasts from one of the lowest on Wall Street to one that projects a new record for the index.
“In the U.S., we forecast robust EPS growth along with modest multiple compression,” Wilson wrote in a note Sunday with his Morgan Stanley colleagues, as they discussed the firm’s outlook for the second half of the year through various assets.
In recent months, Wilson held firm to his 4,500 target for the S&P 500, even as the index hit a series of all-time highs, and said last March that there was no justification for upgrading it given the lack of broad growth. of profits. However, in April, the expert noted that he was refraining from making big predictions about the direction of the index due to growing economic uncertainty.
Overall, the bank expects a “sunny macroeconomic environment”, which will support risk assets in the second half of the year, although Wilson reiterated his view that the broader outcomes for the economy are becoming difficult to predict as the Data becomes more volatile.
Wilson’s 20% improvement leaves JPMorgan Chase & Co. strategist Dubravko Lakos-Bujas among the few remaining declared bears on Wall Street. His forecast calls for a drop of more than 20% in the S&P 500 by the end of the year. Deutsche Bank AG strategists also raised their end-2024 target for the Wall Street benchmark index from 5,100 to 5,500 points.
The Morgan Stanley strategist recommends a focus on quality cyclical and quality growth stocks and maintains long exposure to certain defensive areas such as consumer staples and utilities.
