Morgan Stanley Analyst Upgrades S&P 500 Forecast for 2025

One of Wall Street's most prominent bears, Morgan Stanley's Michael Wilson, has recently taken a bullish turn on the outlook for US stocks. Wilson now predicts that the S&P 500 will rise 2% by June 2025, a significant change from his previous forecast of a 15% decline by December.Wilson, along with his Morgan Stanley colleagues, attributes this shift in outlook to the expectation of robust earnings per share (EPS) growth alongside a modest compression in multiples for US stocks. This adjustment has led him to increase his target for the S&P 500 to 5,400 points, marking a notable uptick from his previous projection of 4,500 points.Despite maintaining a bearish stance in 2023, Wilson's predictions did not align with the market rally, prompting him to revise his forecast for the S&P 500. He now anticipates a fresh record for the index, diverging from his previous conservative outlook.In light of the current macroeconomic environment, Wilson remains cautious about making bold predictions for the S&P 500, emphasizing the unpredictability of economic data. However, he recommends a balanced approach to stock selection, favoring quality cyclicals and growth-oriented stocks while maintaining exposure to defensive sectors like consumer staples and utilities.On the contrary, JPMorgan Chase & Co.'s Dubravko Lakos-Bujas remains among the few remaining bears on Wall Street, forecasting a more than 20% slump in the S&P 500 by the year's end. Lakos-Bujas's colleague, Mislav Matejka, echoes concerns about the likelihood of a sharp rise in US earnings in the upcoming quarters, especially if economic indicators continue to weaken.Despite differing opinions on the market trajectory, Deutsche Bank AG strategists have also adjusted their end-2024 target for the S&P 500 to 5,500 points, underscoring the diverse views on Wall Street regarding the future of US stocks.With ongoing economic uncertainties and a changing landscape for risk assets, analysts like Wilson and Lakos-Bujas offer contrasting perspectives on the potential outcomes for the S&P 500, reflecting the dynamic nature of financial markets.