Morgan Stanley Wealth Management CIO: U.S. stocks will maintain an upward trend in the second half of the year
Morgan Stanley's Chief Investment Officer of Wealth Management predicts that the US stock market will continue to rise in the second half of 2024. Although the pace of growth will slow down, investors should still maintain cautious expectations. While some expect a large influx of funds into the stock market, the Chief Investment Officer believes this is just a fantasy as investors are already quite fully invested. Additionally, money market funds remain attractive, especially in the face of uncertainties in macroeconomic conditions and geopolitics
According to the financial news app Smart Finance, Lisa Shalett, Chief Investment Officer (CIO) of Morgan Stanley's Wealth Management Division, stated that the U.S. stock market will continue to rise in the second half of 2024, despite the slowing pace of increase since achieving double-digit gains since January. Lisa Shalett said, "From now until the end of the year, the path of least resistance is for the stock market to continue to rise." However, she added that investors should have a "cautious expectation" for stock market returns from now until the end of the year.
On Thursday, driven by optimism about economic and profit growth, the artificial intelligence boom, and the possibility of a rate cut by the Federal Reserve this fall, the S&P 500 index remained stable after setting its 25th closing record of the year. The next major event for investors is the U.S. non-farm payroll report for May, which will be released on Friday.
Despite Lisa Shalett's optimism, she mentioned that the expansion of corporate profits this year has already been reflected in stock prices. As the remaining time of 2024 approaches, investors will need to start "borrowing from 2025 expectations." On the positive side, she expects returns to broaden to other areas of the market, not just the large tech giants that have been driving most of the stock market gains since last year.
Some bullish market participants speculate that a large amount of cash will soon leave the sidelines and enter the stock market. In response, Lisa Shalett stated that this is wishful thinking. She mentioned that indicators from Morgan Stanley's Wealth Management Division show that investors are "quite fully invested," while outflows of private wealth funds are closer to average levels. Additionally, she pointed out that the approximately 5% return offered by money market funds is still "quite attractive," especially given the uncertainties in the macroeconomic situation, geopolitics, and the November U.S. elections. She said, "I think there are many reasons to doubt the narrative of this cash wave."