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One of the last big bears on Wall Street is turning bullish on US stocks

(Bloomberg) — One of Wall Street’s most prominent bears just turned bullish on the prospects for U.S. stocks.

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Morgan Stanley’s Michael Wilson now sees the S&P 500 rising 2% by June 2025, a big turnaround from his view that the benchmark will plummet 15% by December.

The strategist – whose bearish outlook for 2023 failed to materialize as markets continued to rise – eventually relented and raised his target for the S&P 500 from 4,500 to 5,400 points. That catapults his forecast from the lowest on Wall Street to one that predicts a new all-time high for the index.

“In the US, we forecast robust earnings per share growth alongside modest multiple compression,” Wilson wrote in a note with his Morgan Stanley colleagues on Sunday as they discussed the company’s view for the second half of its various assets .

In recent months, Wilson repeatedly stuck to his 4,500-point target for the S&P 500, even as the index hit a string of record highs. In March he said there was no justification for raising the index given the lack of broad-based earnings growth. He said last month that he was not making any major statements about the index’s direction given increased economic uncertainty.

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Overall, the bank expects a ‘sunny macro environment’ to support risky assets in the second half of the year, although Wilson reiterated his view that broader outcomes for the economy are difficult to predict as data becomes more volatile.

Wilson’s 20% upgrade leaves JPMorgan Chase & Co.’s Dubravko Lakos-Bujas. to the few remaining prominent bears on Wall Street. His forecast calls for a decline of more than 20% in the S&P 500 by the end of the year. Deutsche Bank AG strategists also raised their end-2024 target for the index to 5,500 from 5,100 on Friday.

The Morgan Stanley strategist recommends a barbell approach to high-quality cyclical stocks and high-quality growth, while maintaining long exposure to certain defensive sectors such as consumer staples and utilities.

–With help from Sagarika Jaisinghani.

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