S&P 500: Morgan Stanley predicts a sharp rise in the stock market

It is predicted by Morgan Stanley that the stock market will continue to grow.

It is possible that the S&P 500 index will reach 5000 points by the end of the year, surpassing its historical maximum.

The US will experience an increase in corporate income and spending on infrastructure that will support market growth.

Experts anticipate that the US stock market will not be able to sustain its upward trajectory.

On Thursday, the S&P 500 index rose for the fifth consecutive day, increasing by more than 3% from the lows of the end of last week and recovering more than half of the entire decline experienced in August.

It is anticipated by Morgan Stanley that the US stock market will have a strong finish to the year. The S&P 500 could potentially reach 5,000 points, which is a 10% increase from its current level.

According to the bank, RBC, the stocks of the seven biggest companies - Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA and Tesla - will remain on an upward trajectory and will bolster the market.

Despite strong gains, the seven market leaders are still below their 2021 close (excluding NVIDIA). Despite this, these companies generally had a good quarter and are seen as having less exposure to geopolitical risks.

In the fourth quarter, the US is expected to see an increase in social and infrastructure spending, due to investments made under the US Inflation Control Act, the Chip Investment Act, and the Infrastructure and Jobs Investment Act, among others.

Andrew Slimmon, managing director at Morgan Stanley Investment Management, stated that investors in the American stock market have been too bearish throughout the year, despite sentiment improving. However, fund flows have yet to become positive.

A survey conducted by CNBC last month revealed that the majority of experts anticipate that the US stock market will not be able to sustain its upward trajectory over the next six months and will close out 2023 at a lower level than it is currently.

JPMorgan predicts that the stock market rally of this year will come to an end due to various factors that will affect the market until the end of 2023.