Morgan Stanley turns bullish on U.S. stocks. Here’s why it says the market lows have already been made.
From Yahoo Finance: 2025-05-21 09:09:00
Morgan Stanley predicts U.S. stocks will rise due to a more accommodative policy agenda. Despite fears of rising bond yields, the bank shifts to overweight on U.S. stocks and bonds, with a bullish outlook. They foresee the S&P 500 hitting 6,500 by the second quarter of 2026. Earnings recovery and Fed rate cuts are expected to support stock markets.
Morgan Stanley believes the worst is over for stocks, with a bullish turn based on rolling earnings recessions and AI-driven efficiency gains. They anticipate a more accommodative policy agenda in the next six to 12 months, including infrastructure investment and tax breaks. The recent U.S.-China tariff pause reduces the risk of recession and supports higher valuations.
The bank foresees a weakening dollar and recommends higher-quality cyclical stocks. They upgrade industrials and utilities sectors, favoring large-cap over small-cap and U.S. over international equities. They predict a 9% drop in the ICE Dollar Index in the next 12 months. Treasury yields may rangebound until the last quarter of this year.
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