Latest news with #MikeWilson
Yahoo
2 days ago
- Business
- Yahoo
Morgan Stanley resets S&P 500 target for 2026
Morgan Stanley resets S&P 500 target for 2026 originally appeared on TheStreet. The stock market surprised many when it bottomed in early April following a sharp tariff-driven sell-off. President Donald Trump's higher-than-hoped tariffs caused investors to reset their outlooks for economic growth lower, ratcheting down corporate and revenue estimates. While the risk remains that inflation will increase because of newly instituted tariffs, his decision to pause instituting the harshest reciprocal tariffs on April 9 was enough to spark a rip-roaring oversold rally, catapulting the S&P 500 and Nasdaq Composite 25% and 32% higher, respectively. The gains erased the 19% near-bear market drop in the S&P 500 this spring, leading to new all-time highs for the benchmark index. 💵💰💰💵 Undeniably, the stock market has climbed a steep wall of worry, and investors are right to wonder if the S&P 500 has enough gas in the tank to continue higher. Morgan Stanley's Chief Investment Officer, Mike Wilson, addressed that question, recently updating the odds that the S&P 500 will be higher in 2026. Stocks latch onto 'not bad' economic data President Trump has said there won't be more extensions on paying tariffs after August 1. Still, a willingness to back off the highest proposed tariffs from April appears to remove the worst-case scenario of an economic reckoning — a recession — from the table for likelihood that the economy sidesteps a reckoning improved further in July when President Trump signed trillions of dollars in tax cuts into law through the One Big Beautiful Bill Act. The stimulus from tax cuts could offset some slowing associated with an uptick in inflation caused by tariffs, assuming any tariff-driven inflation is, dare I say it, tame and transitory. Regardless, an improved economic outlook from April has emboldened stock investors, particularly since most believe that the Federal Reserve will provide additional support. So far, the Fed has remained neutral in 2025. However, the Fed's June forecast suggests two rate cuts by year's end, and most on Wall Street expect more cuts in 2026. If so, Big Beautiful Bill Act stimulus plus dovish rate cuts that put more money in pockets could help corporate revenue and earnings improve, supporting the S&P 500's rich valuation. Currently, the S&P 500's forward price-to-earnings ratio is above 22.2, according to FactSet. That's historically high, given the 5-year and 10-year average forward P/E is 19.9 and 18.4. Analyst revamps S&P 500 outlook for 2026 Stock prices are forward-looking and are considered a leading rather than lagging indicator because they aggregate the opinions of all market participants. So far, the stock market doesn't appear worried about the prospect of GDP-busting inflation dinging corporate profits, something that has Morgan Stanley's Mike Wilson increasingly optimistic."An underappreciated aspect of the earnings story into 2026 is that positive operating leverage is returning from lower wage costs (in part). This is driving upside in our earnings models," wrote Wilson in a research note. "Thus far, we're also not hearing a significant level of concern from corporates across the index in terms of tariff-related costs impacting margins." Wilson acknowledges that could change as we push through earnings season, but generally, he seems to believe that earnings upside may justify stocks' lofty valuations, especially given that Morgan Stanley expects significant Fed interest rate cuts next year. "S&P 500 EPS revisions breadth continues to accelerate higher (now +7%, up from -25% in April), helping to confirm our constructive view on the earnings backdrop post the Liberation Day capitulation," wrote Wilson. "With earnings on solid footing into next year for the overall market and the Fed set to cut rates 7 times through YE 2026 (according to our economists), we think valuation will also remain supported around current levels (~22x)." With earnings revisions trending the right way, improving the "e" in the P/E ratio, the S&P 500 has a better shot at heading higher next year, prompting Wilson to up the odds for more gains. The odds are helped by additional tailwinds from a lower U.S. dollar, which supports currency conversion on overseas sales. More on stocks:According to FactSet, second-quarter net profit margins for S&P 500 companies are estimated to be 12.3%, above the five-year average of 11.8%. Wall Street analysts project earnings growth of 9.3% in 2025 and 14% in 2026. "The [US Dollar Index] DXY is down about 10% from the January highs and has another 7-8% to go into the middle of next year, according to our FX strategists. This should offer further support for U.S. relative earnings revisions versus rest of world," wrote Wilson. "Between retail sales and the Philadelphia Fed Manufacturing survey, macro data last week also appeared to suggest that the demand backdrop is holding up better than many expected." Overall, the improving backdrop makes it more likely that the S&P 500 trades above 7,000 in 2026. "Bottom line, we're leaning more toward our bull case of 7200 for the S&P 500 by the middle of next year," concludes Stanley resets S&P 500 target for 2026 first appeared on TheStreet on Jul 21, 2025 This story was originally reported by TheStreet on Jul 21, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
'I'm hoping we get a pullback': Morgan Stanley's CIO says any potential tariff-fueled drop in stocks is a buying opportunity
Stocks are entering a new bull market, according to Morgan Stanley's CIO. However, tariff risks could cause up to a 10% drop in the stock market in the next few months. Investors should take use any corrections as a buying opportunity, according to Wilson. Mike Wilson sees the S&P 500 hitting 6,500 by year-end, but the path to new all-time highs will be choppy. Morgan Stanley's chief investment officer told Bloomberg TV on Thursday that he expects tariff volatility to ramp up in the third quarter, potentially sparking pullbacks of 5% to 10%. Investors shouldn't be worried, though. Wilson thinks any upcoming corrections will be "short and shallow," presenting a great opportunity to buy the dip. "I'm hoping we get a pullback to some degree," Wilson said on Bloomberg on Thursday. "A lot of clients are looking for a pullback of some kind." Wilson has been pleasantly surprised at the resiliency of markets and their rapid recovery. In his opinion, April's Liberation Day chaos firmly marked the bottom for the stock market, and he anticipates a strong upward trajectory going forward for equities. "This is what the beginning of a new bull market looks like," Wilson said. "It's just explosive — it doesn't let people in. The rate of change is accelerating beyond what you expected." "The earnings revision breadth is explosive," Wilson added. "You can't deny the fact that companies are good are mitigating tariffs." Earnings revision breadth, or the proportion of analysts who have raised their estimates minus the proportion who have lowered them, has improved significantly in the past few months. In April, earnings revision breadth was overwhelmingly negative at -25%. Today, the metric has fully turned a corner into positive territory, reaching 3%. The earnings recovery has been especially pronounced in the financials sector, which Morgan Stanley is overweight on. Morgan Stanley anticipates tariff impacts will become clearer in the third quarter as companies begin passing more of the cost on to consumers. Wilson's expecting a hit to corporate profits, especially for smaller companies with less pricing power, and increased inflation. After a few months of relatively benign inflation reports, the June CPI number was slightly hotter than expected, indicating that tariffs are beginning to show up in economic data. However, given the strong fundamentals of the stock market, Wilson believes any headline risks won't pose a serious threat to the S&P 500's continued upward trajectory. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
'I'm hoping we get a pullback': Morgan Stanley's CIO says any potential tariff-fueled drop in stocks is a buying opportunity
Stocks are entering a new bull market, according to Morgan Stanley's CIO. However, tariff risks could cause up to a 10% drop in the stock market in the next few months. Investors should take use any corrections as a buying opportunity, according to Wilson. Mike Wilson sees the S&P 500 hitting 6,500 by year-end, but the path to new all-time highs will be choppy. Morgan Stanley's chief investment officer told Bloomberg TV on Thursday that he expects tariff volatility to ramp up in the third quarter, potentially sparking pullbacks of 5% to 10%. Investors shouldn't be worried, though. Wilson thinks any upcoming corrections will be "short and shallow," presenting a great opportunity to buy the dip. "I'm hoping we get a pullback to some degree," Wilson said on Bloomberg on Thursday. "A lot of clients are looking for a pullback of some kind." Wilson has been pleasantly surprised at the resiliency of markets and their rapid recovery. In his opinion, April's Liberation Day chaos firmly marked the bottom for the stock market, and he anticipates a strong upward trajectory going forward for equities. "This is what the beginning of a new bull market looks like," Wilson said. "It's just explosive — it doesn't let people in. The rate of change is accelerating beyond what you expected." "The earnings revision breadth is explosive," Wilson added. "You can't deny the fact that companies are good are mitigating tariffs." Earnings revision breadth, or the proportion of analysts who have raised their estimates minus the proportion who have lowered them, has improved significantly in the past few months. In April, earnings revision breadth was overwhelmingly negative at -25%. Today, the metric has fully turned a corner into positive territory, reaching 3%. The earnings recovery has been especially pronounced in the financials sector, which Morgan Stanley is overweight on. Morgan Stanley anticipates tariff impacts will become clearer in the third quarter as companies begin passing more of the cost on to consumers. Wilson's expecting a hit to corporate profits, especially for smaller companies with less pricing power, and increased inflation. After a few months of relatively benign inflation reports, the June CPI number was slightly hotter than expected, indicating that tariffs are beginning to show up in economic data. However, given the strong fundamentals of the stock market, Wilson believes any headline risks won't pose a serious threat to the S&P 500's continued upward trajectory. Read the original article on Business Insider Sign in to access your portfolio
Business Insider
6 days ago
- Business
- Business Insider
'I'm hoping we get a pullback': Morgan Stanley's CIO says any potential tariff-fueled drop in stocks is a buying opportunity
Stocks are entering a new bull market, according to Morgan Stanley's CIO. However, tariff risks could cause up to a 10% drop in the stock market in the next few months. Investors should take use any corrections as a buying opportunity, according to Wilson. Mike Wilson sees the S&P 500 hitting 6,500 by year-end, but the path to new all-time highs will be choppy. Morgan Stanley's chief investment officer told Bloomberg TV on Thursday that he expects tariff volatility to ramp up in the third quarter, potentially sparking pullbacks of 5% to 10%. Investors shouldn't be worried, though. Wilson thinks any upcoming corrections will be "short and shallow," presenting a great opportunity to buy the dip. "I'm hoping we get a pullback to some degree," Wilson said on Bloomberg on Thursday. "A lot of clients are looking for a pullback of some kind." Wilson has been pleasantly surprised at the resiliency of markets and their rapid recovery. In his opinion, April's Liberation Day chaos firmly marked the bottom for the stock market, and he anticipates a strong upward trajectory going forward for equities. "This is what the beginning of a new bull market looks like," Wilson said. "It's just explosive — it doesn't let people in. The rate of change is accelerating beyond what you expected." "The earnings revision breadth is explosive," Wilson added. "You can't deny the fact that companies are good are mitigating tariffs." Please help BI improve our Business, Tech, and Innovation coverage by sharing a bit about your role — it will help us tailor content that matters most to people like you. What is your job title? (1 of 2) Entry level position Project manager Management Senior management Executive management Student Self-employed Retired Other Continue By providing this information, you agree that Business Insider may use this data to improve your site experience and for targeted advertising. By continuing you agree that you accept the Terms of Service and Privacy Policy . Earnings revision breadth, or the proportion of analysts who have raised their estimates minus the proportion who have lowered them, has improved significantly in the past few months. In April, earnings revision breadth was overwhelmingly negative at -25%. Today, the metric has fully turned a corner into positive territory, reaching 3%. The earnings recovery has been especially pronounced in the financials sector, which Morgan Stanley is overweight on. Morgan Stanley anticipates tariff impacts will become clearer in the third quarter as companies begin passing more of the cost on to consumers. Wilson's expecting a hit to corporate profits, especially for smaller companies with less pricing power, and increased inflation. After a few months of relatively benign inflation reports, the June CPI number was slightly hotter than expected, indicating that tariffs are beginning to show up in economic data. However, given the strong fundamentals of the stock market, Wilson believes any headline risks won't pose a serious threat to the S&P 500's continued upward trajectory.
Bloomberg
7 days ago
- Business
- Bloomberg
Mike Wilson Sees Up to 10% S&P 500 Drop, Is Eager to Buy the Dip
Morgan Stanley's Mike Wilson, not long ago one of Wall Street's most steadfast bears, says he sees a bull market building in stocks. But first the S&P 500 Index may have to take a hit. The bank's chief US equity strategist sees US equity prices dropping 5% to 10% this quarter as the impact of President Donald Trump's trade policies gets reflected on corporate balance sheets. He thinks the decline will be short lived, giving investors an attractive entry point to a rally that will ultimately be driven by improving expectations for corporate earnings growth.
