(Reuters) -Morgan Stanley backed its bullish stance on U.S. equities on Monday, citing strong earnings momentum, and said it was expecting a modest pullback in the third quarter that could create an opportunity to buy the dip.<\/p>\n
The Wall Street brokerage is leaning more towards its bull case of the benchmark S&P 500 hitting 7,200 points by the middle of the year, it wrote in a note. In May, the brokerage said the S&P 500 was expected to hit 6,500 in the second quarter of 2026.<\/p>\n
“With earnings on solid footing into next year and the Fed closer to cutting rates, valuations can remain supported around current levels (~22x) as we think about the 12-month outlook,” Morgan Stanley equity strategists led by Michael Wilson said.<\/p>\n
However, the brokerage said rising Treasury yields – especially the 10-year note breaching above 4.5% – could increase rate sensitivity for equities and an underperformance of rate-sensitive stocks such as small caps.<\/p>\n
Morgan Stanley also expects tariff-related cost pressures to show up later this year, which could impact company margins and bump up inflation, leading to a change in rate cut expectations by the Federal Reserve.<\/p>\n
Lastly, it estimates that seasonal trends may hit stocks in from mid-July through August.<\/p>\n
However, the brokerage said it would buy the dips as the risks could be temporary and only lead to a mild consolidation.<\/p>\n
Jefferies also raised its S&P 500 year-end target to 5,600 from its previous forecast of 5,300, according to the brokerage’s note published on Friday.<\/p>\n
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Anil D’Silva)<\/p>\n","protected":false},"excerpt":{"rendered":"(Reuters) -Morgan Stanley backed its bullish stance on U.S. equities on Monday, citing strong earnings momentum, and said…\n","protected":false},"author":2,"featured_media":13978,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46,12816],"class_list":["post-13977","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy","tag-morgan-stanley"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/13977","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=13977"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/13977\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/13978"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=13977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=13977"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=13977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}