The past month’s mild stock market dip hasn’t dissuaded strategists at Morgan Stanley from raising their S&P 500 forecast for next year.
Mike Wilson, the financial giant’s chief investment officer, now thinks the S&P 500 will finish 2026 at 7,800 amid a “new bull market.”
With the leading index trading at 6,702.82 at time of writing, that would represent an increase of more than 16% over the next 13 months.
Wilson says in a new interview with Bloomberg Television that the Federal Reserve needs to cut rates for that forecast to materialize.
He also says it’s dependent on “the earnings cycle broadening out.” Wilson argues that the Fed’s balance sheet needs to expand to support the growth that he predicts will materialize next year.
[5:32] “If we don’t get at least one of those items surprising the markets, meaning more than three cuts, or we get more balance sheet expansion, call it QE, call it something else, yield curve control, whatever you want to call it, if we don’t get some combination of that, then we’re not going to reach our target.
So I’m assuming that we get there either through the labor data or through some financial stress.”
The S&P 500 is up nearly 1% in the past five days but down 1.31% in the past month.
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