Strong U.S. financial institution, Morgan Stanley, foresees record-breaking highs for the S&P 500 due to a weakening U.S. dollar, improved earnings revisions, anticipated Federal Reserve rate reductions, and other supporting factors.
The Daily Hodl:Investment titan Morgan Stanley is bullish about the stock market's future, predicting that the S&P 500 will rally to new heights by the middle of next year.
Morgan Stanley's top corporate credit researcher, Andrew Sheets, shared his optimistic forecast in a recent CNBC interview. He believes that the S&P 500 could surge by almost 8% in 2026 due to a supportive macroeconomic environment.
Sheets explains that the market has already accounted for US recession risks and potential drawdowns, like the ones seen in April. He thinks that the equity market will instead focus on a brighter future, with better earnings revisions and a weaker US dollar serving as tailwinds.
"We expect inflation data to improve slightly, growth to slow down, but importantly, the equity market will look ahead to a more favorable rate of change. We've already seen some positive earnings revision numbers, and we think that trend will continue.
A weaker dollar is a boost for earnings as well. This, combined with better earnings revisions and a Fed likely to cut interest rates over the next 12 months, means the S&P 500 could reach 6,500 by mid-2026."
As of today, the S&P 500 is trading at 6,038 points.
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- The optimistic forecast for the stock market from Morgan Stanley, a renowned investment firm, may potentially cause a shift in attention from traditional stocks to altcoins within the cryptocurrency market.
- As Morgan Stanley expects the Federal Reserve to cut interest rates over the next 12 months, some investors may choose to allocate part of their funds towards investing in cryptocurrencies, such as Bitcoin and Ethereum, considering the potential for higher returns in a low-interest-rate environment.
- Cryptocurrencies like Bitcoin and Ethereum, backed by the blockchain technology, could see increased adoption as more organizations, like FIFA Rivals and Bitpanda, venture into Web 3.0 and integrate cryptocurrencies in their services. This adoption can further fuel the growth and demand for altcoins in the cryptocurrency market.