Morgan Stanley’s Wilson Cautions on Stock Risks Amid Rising Yields
Morgan Stanley’s strategist warns that surging Treasury yields may pose risks to US equities in the coming months
Morgan Stanley, Michael Wilson, US Stocks, Treasury Yields, Inflation, S&P 500
New York: So, here’s the scoop. Morgan Stanley’s strategist, Michael Wilson, is sounding the alarm about US stocks. He thinks the next six months could be pretty rough.
Why? Well, Treasury yields are climbing, and that’s got everyone worried about inflation. Wilson pointed out that the S&P 500 and bond yields are now moving in opposite directions, which isn’t a good sign.
He mentioned that the 10-year Treasury yield has shot up past 4.5%, and the 30-year yield is at its highest since late 2023. That’s a big deal!
Plus, the dollar is getting stronger, which could hurt companies that do a lot of business overseas. If that happens, it could drag down stocks even more, especially since the market isn’t looking too great right now.
Wilson believes 2025 might be a mixed bag for stocks. He thinks there could be some positive changes later in the year, like potential tax cuts, that might help boost the market.
He’s got a target of 6,500 points for the S&P 500 over the next year, which would mean about a 9% gain from where it is now. But he’s cautious, noting that the rally in stocks hit a snag in December due to concerns about economic growth.
Technology stocks, which have been the stars of the S&P 500 lately, are starting to lag behind. Wilson, who was pretty bearish on Wall Street for a while, has turned more optimistic but still sees some issues.
He pointed out that there’s a big gap between the overall index and its individual stocks. This could change in one of two ways: either more stocks start performing better, or the S&P 500 drops closer to its average.
For the first scenario to happen, we’d need lower rates, a weaker dollar, and better earnings reports. So, it’s a wait-and-see game for now!
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