U.S. stocks, which rose in November, will become more volatile in December as U.S. bond yields rise and fall. This was predicted by Morgan Stanley strategist Michael Wilson.
He remains bearish on the S&P 500 after it rose nearly 20% this year, but expects more constructive seasonal trends and the so-called “January effect” to support stocks next month. Earlier in December, it predicted in a report that it could lead to “short-term volatility in both interest rates and equities.”
The S&P 500 rose about 9% last month, one of the best November gains in 100 years. As a result, the index has entered overbought territory. This is a technical indicator that is generally considered to be a sign of a crash.
Still, the so-called MACD (moving average convergence divergence) momentum of the S&P 500 remains positive. The slowing economy and falling inflation are fueling expectations that the U.S. Federal Reserve will cut interest rates as early as March next year.However, on the 1st, Federal Reserve Chairman Jerome Powell predicted that interest rates would be cut in the first half of 2024.I pushed back.
Investors have priced in a shift in U.S. Federal Reserve policy several times over the past year, but this time around they believe the shift to easing will occur “within a still healthy macro backdrop,” Wilson said. “There is strong support” for this view. This scenario “would be the most bullish outcome for stocks,” Wilson said.
Bank of America (BofA), Deutsche Bank and RBC Capital Markets expect the S&P 500 to hit new record highs next year.
Meanwhile, Wilson expects the S&P 500 to end next year at around 4,500 points, about 2% below current levels.
Original title:Morgan Stanley’s Wilson Says December Will Be Rocky for Stocks(excerpt)
2023-12-04 13:18:34
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