Morgan Stanley's Wilson Says Rally Isn't Start of Bull Market

But where Wilson is looking at a half-empty glass, Subramanian says she sees a “half-full” one. She raised her 2023 year-end price target for the S&P 500 to 4,300 from 4,000. The equities benchmark topped 4,200 on Friday before drifting lower.

“The era of easy money is behind us, but that might be a good thing,” she wrote in a note to clients on Sunday. “Corporate America has shifted focus to structural benefits — efficiency/automation/AI — and have bought themselves time to adapt via long-dated fixed-rate debt. Old economy cyclicals, capital-starved since 2008, have become disciplined and self-sufficient, evidenced by lower betas and more stable earnings.”

History appears to be on Subramanian’s side, as a strong first 100 days in the S&P 500 typically means significant upside for the rest of the year.

One short-term risk for the market is the ongoing debate in Washington over raising the US debt ceiling. Wilson said a resolution in the negotiations may briefly drive stocks higher, but “we would view that as a false breakout/bull trap.”

Others, including JPMorgan Chase & Co. strategists led by Dubravko Lakos-Bujas are also warning about more market volatility as the talks drag on. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet Monday.

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