Morgan Stanley told what to expect from the stock market in 2023

For two years, the US stock market has experienced its longest streak of monthly growth.

The scope of stock asset growth is starting to expand.

Morgan Stanley is drawing attention to a situation reminiscent of 2019.

After one year, the S&P 500 experienced an increase of nearly 29%.

In July, the S&P 500 saw a 3.1% increase, while the Nasdaq Composite rose by 4%. This marks five consecutive months of stock market growth, which has resulted in the S&P 500 recovering more than 19% since the start of the year. This surge in the stock market is largely attributed to the optimism surrounding lower inflation and a strong economic outlook.

The seven largest stocks drove the market's growth during the first five months. In the last two months, however, the remaining stocks have started to increase, as indications suggest that the Federal Reserve is close to concluding its rate hike cycle.

Since the beginning of June, the equally-weighted version of the S&P 500 has seen an increase of almost 11%, in contrast to the 1% decrease it experienced in the preceding five months.

Michael Wilson, chief strategist for US equities at Morgan Stanley, who is known for his bearish forecasts, stated that the stock market is following the same trajectory as it did in 2019. This was followed by the S&P 500 increasing by almost 29% in a year, which was the best result in the past decade.

In 2019, the Fed's monetary policy tightening cycle was completed when it stopped raising the rate and started to reduce it, while also increasing its balance sheet by the end of the year. This is similar to the situation we are seeing today, where a rally is being driven by the completion of the monetary policy tightening cycle.

Citi has increased its forecast for the S&P 500 at the end of this year and in 2024 due to the increasing possibility of a gentle recovery in the US economy, which has proven to be more robust than anticipated.

Investors have ceased to take notice of the decrease in corporate profits of businesses and no longer anticipate a severe recession in the economy.