Morgan Stanley: Investor sentiment has reversed, and US stocks are expected to continue to break through.
Morgan Stanley's senior portfolio manager, Andrew Slimmon, believes that as investor sentiment reverses and strategies shift, the US stock market is expected to continue its upward breakthrough. The stock market rally is expanding, with the S&P 500 index approaching historical highs. Investor optimism has reached its highest level in two and a half years, while pessimism stands at 20.9%. Wall Street analysts are also optimistic about the stock market and the economy, predicting the arrival of another "roaring twenties". However, Morgan Stanley strategists have warned that despite the consensus shifting towards a soft landing, the US economy may still unexpectedly fall into recession in 2024.
Zhitong App has learned that after experiencing severe market fluctuations in the past few years, the Pro UltrPro Shrt S&Pro 500 is now almost back to its level at the beginning of 2021. However, Andrew Slimmon, Senior Portfolio Manager at Morgan Stanley Investment Management, pointed out that as investors recover from their pain and switch strategies, the stock market is expected to break through. He noted that market gains are expanding.
"If you look back at history, this is a very optimistic signal for the market," he said in an interview on Wednesday. "At this critical moment, you can only stay bearish by avoiding reality. This means that the market is breaking through to the upside."
After soaring 24% this year, the Pro UltrPro Shrt S&Pro 500 is less than 1% away from its historical closing high, as there is no expectation of an economic recession in the United States, and cooling inflation allows the Federal Reserve to signal interest rate cuts next year.
This marks a dramatic turnaround since 2022, when the benchmark index plummeted 20% and investors took defensive positions.
As the stock market is expected to end the year on a strong note, the number of bulls in the market undoubtedly exceeds the number of bears. The latest survey by AAII shows that market optimism has risen to 52.9%, reaching its highest level in two and a half years, while pessimism stands at 20.9%.
Slimmon said, "At the beginning of this year, we generally had a negative view. This is completely consistent with what we have seen in the past." However, he explained that when the stock market hits a low point, investors start selling, and as the trend changes, they re-enter the market to chase the rally.
Meanwhile, other Wall Street analysts are also very optimistic, with some even predicting that the stock market and the economy will usher in another "roaring twenties".
However, Morgan Stanley's strategists recently warned that despite the consensus on Wall Street shifting towards a soft landing, the US economy could still unexpectedly fall into a recession in 2024.