'We Were Wrong:' Bearish Morgan Stanley Strategist Waves White Flag To Market Rally, But Points To Possible Headwind For 2nd Half
Portfolio Pulse from Shanthi Rexaline
Morgan Stanley's Equity Strategist, Michael Wilson, admitted his bearish market outlook was incorrect due to the extended market rally this year. He attributed the stronger-than-expected consumer spending to warmer weather and credit card borrowing, but warned these factors may not be sustainable. Wilson also noted that the market benefited from AI, with Nvidia and Microsoft emerging as winners. However, he warned that the booming AI demand can't fully offset the cyclical slowing in the broader semiconductor sector. Wilson also pointed out that falling inflation has been a key driver of the U.S. equity market rally. He now sees disinflation as a potential headwind, eating into sales growth. Despite this, he continues to have a 2023 year-end S&P 500 price target of 3,900.
July 25, 2023 | 9:16 am
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POSITIVE IMPACT
Microsoft emerged as a winner in the market rally, benefiting from the boom in AI demand. However, the broader slowdown in the semiconductor sector could impact its performance.
Microsoft's performance has been positively impacted by the boom in AI demand. However, the broader slowdown in the semiconductor sector could pose a risk to its future performance.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Nvidia has benefited from the boom in AI demand, emerging as a winner in the market rally. However, the broader slowdown in the semiconductor sector could impact its performance.
Nvidia's performance has been positively impacted by the boom in AI demand. However, the broader slowdown in the semiconductor sector could pose a risk to its future performance.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust ended Monday’s session at $454.20, up 0.45%. However, Morgan Stanley's 2023 year-end S&P 500 price target is 3,900, indicating a potential downside.
The SPDR S&P 500 ETF Trust's performance could be impacted by Morgan Stanley's lower 2023 year-end S&P 500 price target.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Taiwan Semiconductor Manufacturing Company's Q2 results indicate that the booming AI demand can't fully offset the cyclical slowing in the broader semiconductor sector.
TSM's performance could be negatively impacted by the broader slowdown in the semiconductor sector, despite the booming AI demand.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70