Morgan Stanley on the benchmark US fairness index forward. Their tone is very cautious:
- Given the sturdy technical help slightly below present ranges, the S&P 500 can proceed to rally towards 4000 or 4150 within the absence of capitulation from firms on 2023 earnings steerage.
- Conversely, ought to rates of interest stay sticky at present ranges, all bets are off on how far this fairness rally can transcend present costs.
- Consequently, we keep tactically bullish as we enter the meat of what’s prone to be a sloppy earnings season.
- We simply haven’t got the arrogance that there can be sufficient capitulation on 2023 earnings to take 2023 earnings per share forecasts down within the method that it takes shares to new lows. As a substitute, our base case is, that occurs in both December when vacation demand fails to materialize or throughout fourth-quarter earnings season in January and February when firms are pressured to debate their outlooks for 2023 decisively. Within the meantime, benefit from the rally.
There’s nothing like a rally to immediate bullish calls …