Morgan Stanley's Optimistic Outlook on Stock Market Growth

According to BlockBeats, Morgan Stanley's Chief Equity Strategist Mike Wilson has highlighted that the stock market's rise since April has been primarily driven by fundamentals. While a short-term consolidation may occur, Wilson remains optimistic about the market's trajectory over the next 6-12 months, citing three key factors supporting this growth. Firstly, earnings improvement has been significant, with the earnings per share (EPS) revision rate recovering from -25% in April to -5%, providing a foundation for further index gains. Secondly, the expectation of interest rate cuts is gaining traction, as the market begins to factor in the Federal Reserve's easing policies. Morgan Stanley anticipates a total of seven rate cuts by 2026. Lastly, the reduction in risks, such as falling oil prices and easing policy and geopolitical tensions, has notably diminished concerns about an economic recession. Wilson notes that the current environment is conducive to a broad market rally, with gains expected to spread from high-quality large-cap stocks to a wider range of equities, while interest rate risks remain manageable.