Tough month for stocks? Morgan Stanley bear says so

Tough month for stocks? Morgan Stanley bear says so
Strategist Michael Wilson sees volatility during December.
DEC 04, 2023
By  Bloomberg

US stocks are headed for a rocky end to the year after rallying in November as bond yields fluctuate, according to Morgan Stanley’s Michael Wilson.

The strategist — who remained broadly bearish this year even as the S&P 500 gained nearly 20% — said in a note that December could bring “near term volatility in both rates and equities” before more constructive seasonal trends as well as the so-called “January effect” support stocks next month.

The benchmark S&P 500 advanced about 9% last month — one of its best November rallies in a century — on optimism around a peak in interest rates. That has left the index in overbought territory — a technical level that is generally considered to be precursor to a selloff. 

Still, the S&P 500’s so-called MACD momentum — which shows the relationship between two moving averages of a security’s price — remains positive, as a slowing economy and a drop in inflation encourage bets that the Federal Reserve could begin to reduce rates as early as March. Fed Chair Jerome Powell on Friday pushed back against expectations of cuts in the first half of 2024.

Wilson said that while investors had priced in a Fed pivot several times in the past year, this time round they have shown “the most support” as they expect it to play out “amid a still healthy macro backdrop.” That scenario “would be the most bullish outcome for equities,” the strategist wrote.

 Other Wall Street forecasters have also voiced optimism about the outlook for U.S. stocks next year, with those at Bank of America Corp., Deutsche Bank Group and RBC Capital Markets predicting a record high for the S&P 500. Wilson is still broadly neutral for the year as he expects the index to end 2024 around 4,500 points — about 2% below current levels.

Latest News

Judge OKs more than $90 million in settlement money for GWG investors
Judge OKs more than $90 million in settlement money for GWG investors

Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.

Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs
Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs

Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.

Retirement uncertainty cuts across generations: Transamerica
Retirement uncertainty cuts across generations: Transamerica

National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.

Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future
Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future

While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.

Raymond James continues recruitment run with UBS, Morgan Stanley teams
Raymond James continues recruitment run with UBS, Morgan Stanley teams

A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave