Morgan Stanley Predicts New All-Time Highs for S&P 500 Amid Weaker US Dollar, Better Earnings Revisions, Incoming Fed Rate Cuts and More

Funding banking big Morgan Stanley believes the S&P 500 won’t revisit its April lows and as a substitute rally to new all-time highs inside a yr.

Morgan Stanley’s international head of company credit score analysis, Andrew Sheets, says in a brand new CNBC interview that he sees the S&P 500 surging by almost 8% in 2026, powered by a positive macroeconomic backdrop.

In accordance with Sheets, the inventory market seems to have digested US recession odds and is poised to steadily climb larger within the coming months.

“We expect the inflation information will decide again up a bit bit, we do suppose progress goes to sluggish some. However importantly, we expect the fairness market is forward-looking and we expect the fairness market goes to look forward to a greater fee of change. We’ve already began to see among the earnings revision numbers incrementally get higher.

We expect that the greenback has been weak. We expect it continues to be weak. That’s a tailwind for earnings.

So we expect the market goes to see higher earnings revisions. Already, we expect we’ve sort of priced [in] a recession, priced [in] the standard drawdown again within the April lows.

So a greater fee of change, higher development on earnings revisions, tailwind from a weaker greenback ought to assist S&P earnings maintain up. The Fed’s going to be chopping over the following 12 months. We don’t anticipate a recession. Normally when that occurs, the a number of doesn’t decline. And in order that’s why we expect the S&P can transfer as much as 6,500 by the center of subsequent yr.”

As of Tuesday’s shut, the S&P 500 is buying and selling at 6,038 factors.

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