Morgan Stanley strategist, who guessed the dynamics of shares in spring, bets on the continuation of the rally

U.S. stocks will continue to rally after four consecutive months of growth, said analyst Michael Wilson of Morgan Stanley, who correctly predicted the recovery of the U.S. stock market after the April sell-off. In his opinion, the market will be supported by Fed rate cuts and strong corporate profits.

The U.S. economy is entering the early phase of the economic cycle, when interest rates are falling and corporate earnings are rising, according to a Morgan Stanley strategist. In addition, rate-sensitive stocks, such as small-cap securities, have lagged the market this year and have the potential to rebound, he added.

"We disagree with the [investment] idea that rate cuts are already priced into quotes," Bloomberg quoted Wilson as saying in a research note. - We take into account the upcoming traditionally weak period, but are still ready to buy out drawdowns if they occur," the strategist emphasized.

Wilson warned that the U.S. stock market rally in September could face risks from seasonal weakness and high inflation. However, he is convinced that any consolidation - a pause in growth - in the stock market in the near term will "set the stage for a strong finish to the year."

September in the U.S. stock market may start with a sell-off: futures on the S&P 500 index fell by 0.8%, contracts on the technological Nasdaq Composite collapsed immediately by 0.1%, shows CNBC. He attributes this to uncertainty over the decision of the U.S. Court of Appeals for the United States, which on Friday, August 29, found Donald Trump's "reciprocal" duties illegal. Investors are taking profits on stocks that have become bull market leaders, such as Nvidia and Palantir, CNBC notes.

The court ruling increased the likelihood that the U.S. will have to return the duties already collected, which could aggravate the already tense fiscal situation in the country, the channel explains. Yields on government bonds jumped: on ten-year bonds - by more than six basis points to 4.29%, and on thirty-year bonds - to 4.98%.

The focus this week is on key labor market data, which can provide insight into the state of the economy and the Fed's future course of monetary policy. According to CME FedWatch, Wall Street is now pricing in a 92 percent probability of a 0.25 percentage point rate cut at the end of the regulator's September meeting and a nearly 50 percent chance that the U.S. rate will be cut twice before the end of 2025.

The S&P 500 index has rallied to its highest level since April on expectations that U.S. trade duties will not have as strong an economic impact as initially feared. Renewed optimism about artificial intelligence has pushed up shares of tech giants, and strategists at Evercore predict that this euphoria could give the index a 20 percent gain by the end of 2026.

This article was AI-translated and verified by a human editor