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Despite a recent surge in the S&P 500, Morgan Stanley maintains its stance on U.S. stocks. Analysts specializing in equities at the company observe a growing bullish sentiment and positioning, with the former reaching its highest levels in over two years.
Although the analysts recognize that the majority opinion is often accurate and that sudden changes in sentiment and positioning can be correct due to the market’s collective intelligence, they maintain a pessimistic outlook regarding growth.
“We find it hard to get on board with the current excitement and narrative supporting it. In other words, if second-half growth re-accelerates as expected, then the bullish narrative being used to support equity prices will be proven correct. If not, many investors may be in for a rude awakening given the very big reach for risk we are seeing,” they said in a client note.
Net-net, Morgan Stanley hasn’t changed its mind regarding growth and still expects to see a “more disappointing outcome.”
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