Morgan Stanley’s Wilson sees the S&P 500 trading at a range from 5000-5500

Published 14/04/2025, 11:52
© Reuters

Investing.com -- Morgan Stanley’s top strategist expects the S&P 500 to trade within a range of 5000 to 5500, as offsetting market forces keep equities in flux.

While the recent 90-day pause on reciprocal tariffs and additional trade concessions have eased some recession fears, the bank’s Michael Wilson says uncertainty remains high, and the Federal Reserve’s reluctance to provide monetary policy support is limiting upside potential.

“The equity market will likely remain in a wide trading range with high volatility until we have more certainty on the depth of the growth slowdown and the timing of a recovery,” Wilson said in a Monday note.

Wilson cites the U.S. administration’s willingness to “course adjust” as a key near-term positive, but the broader economic picture still remains fragile.

Long-end Treasury yields have jumped more than 60 basis points, and the back-and-forth nature of recent policy changes continues to weigh on business and consumer sentiment.

Morgan Stanley (NYSE:MS) sees earnings growth in 2025 at 6%, with base case earnings per share (EPS) revised down to $257 from $271. The bank estimates 2026 EPS at $281, or 9% growth. In a mild recession scenario, those forecasts fall to $240 and $249, respectively.

“We’ve experienced a lot of price damage, but it’s too early to conclude that the durable lows are in,” Wilson said, pointing to policy uncertainty, weakening earnings revisions, and elevated long-end rates.

The strategist suggests a more dovish Fed could push equities out of the current range, but this would likely require weaker labor data or funding stress—conditions that might initially hurt markets.

A meaningful trade deal with China or a drop in 10-year yields toward 4% could also provide upside, provided these moves aren’t tied to broader recession fears.

On the downside, the strategist sees risks from deteriorating corporate confidence and further earnings weakness.

A break below the 5000 level remains possible if 10-year yields move above 5% or if labor markets begin to weaken more sharply. Until greater clarity emerges, Wilson expects volatility to persist and advises investors to brace for continued swings within the stated range.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.