Morgan Stanley’s Mike Wilson just turned positive in his view of stocks after his original 2024 prediction failed to pan out. The U.S. equity strategist now expects the S & P 500 will rise to 5,400 by the second quarter of 2025. He previously said the index would slide to 4,500 by the end of this year. The new outlook represents roughly a 2% rise from Friday’s close of 5,303.27. The new target can hardly be described as an optimistic outlook for stocks. Regardless, it marks a departure for Wilson from his previously grim prediction after this year’s rally powered stocks to all-time highs . It also passes the year-end forecasts of many market strategists. Just last week, the S & P 500 closed above 5,300 for the first time. .SPX YTD mountain S & P 500 Wilson noted the continued difficulty in predicting outcomes given an uncertain macroeconomic picture, reflected in the vast gulf between Morgan Stanley’s bull and bear cases. His bull case of 6,350 represents roughly 20% upside over the next 12 months for the S & P 500. And his 4,200 bear case is a roughly 20% selloff. “[Macro] outcomes have become increasingly hard to predict as data have become more volatile,” Wilson wrote. “We see this environment persisting—a view that’s reflected in both our bull versus bear case skew (which is wider than normal) and our sector/style recommendations.” Read more Wall Street’s official stock market outlook — The latest CNBC Market Strategist Survey Given this backdrop, the U.S. equity strategist said he favors a portfolio that can work across a “wider range of potential outcomes.” These outcomes include quality cyclicals that can win out in a “no landing” scenario, where the economy continues expanding, and quality growth that can outperform in a “soft landing” scenario, where the economy cools but doesn’t shrink. In particular, Wilson upgraded industrials to overweight, citing an attractive entry point as earnings improve. He also favors defensive areas such as consumer staples and utilities. He prefers large caps over small caps. Wilson is not the only market strategist in recent days to revisit his forecast. BMO’s Brian Belski recently hiked his target to 5,600, the most bullish on Wall Street , saying he “underestimated the strength of the market momentum” at the start of the year. Deutsche Bank’s Binky Chadha hiked his S & P 500 target to 5,100, noting the benchmark could pop to 5,500. But market strategists on average are anticipating the S & P 500 will fall to 5,220 by the end of 2024, according to CNBC’s Market Strategist Survey . After Wilson’s about-face, JPMorgan’s Dubravko Lakos-Bujas now holds the most bearish view, at 4,200 — implying stocks will plunge more than 20% from current levels.
Morgan Stanley stock strategist Mike Wilson raises S&P 500 forecast to 5,400 after bearish call on 2024 fails to pan out
May 20, 2024
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