S&P 500 index growth in the fourth quarter is “more likely yes than no” – Morgan Stanley

A rally in the S&P 500 in the fourth quarter of 2023 is "more likely than not," Morgan Stanley's Michael Wilson said.

Wilson and other strategists said most investors believe there is a potential rally if current levels persist in the near term, despite lingering concerns about higher interest rates and slowing economic growth.

"Many are still leaning toward a longer term than would be desirable to reduce the chance of missing a year in which narrow megacap strength has driven guidance," they said, even though confidence levels may have eased slightly last week .
Morgan Stanley maintains its year-end S&P 500 price target of 3,900 and believes the best positioning is with a mix of defensive growth stocks that have stable earnings, as well as late-cycle stocks such as energy companies.

Wilson, one of Wall Street's most bearish advocates, said positive market sentiment depends on current stock prices maintaining their current levels in the short term.

“If that doesn't happen, we could see positioning quickly shift to profit taking and/or relative performance by year-end,” said Wilson, chief U.S. equity strategist at Morgan Stanley.
The S&P 500 index (.SPX) is up about 13% this year, helped by artificial intelligence euphoria and expectations that the U.S. central bank won't raise interest rates further, but recent economic data and Fedspeak have changed sentiment over the past month.

Stocks came under selling pressure last week as investors rushed into Treasuries following Hamas' surprise attack on Israel, but the S&P 500 still managed some gains.
The S&P 500 index (.SPX) is up about 13% this year, helped by artificial intelligence euphoria and expectations that the U.S. central bank won't raise interest rates further, but recent economic data and Fedspeak have changed sentiment over the past month.

Stocks came under selling pressure last week as investors rushed into Treasuries following Hamas' surprise attack on Israel, but the S&P 500 still managed some gains.