23 May

Morgan Stanley: S&P 500 Index Could Touch 2,700 in Next Year

WRITTEN BY Sarah Sands FEATURED IN Active Management: Mutual Funds, Closed-End Funds, Hedge Funds

CNBC’s interview with Morgan Stanley’s chief equity strategist

In an interview with CNBC’s Halftime Report on May 12, 2017, Mike Wilson, the chief equity strategist at Morgan Stanley (MS), shared his view on the bull market, his expectations for the S&P 500 Index, and which sectors could do well in the near term.

Morgan Stanley: S&P 500 Index Could Touch 2,700 in Next Year

Mike Wilson’s view on the S&P 500 Index

Mike Wilson said in the interview that he’s bullish on the market rally (SPY) (QQQ). He expects that this bull market will continue and stocks will see more upside. His firm believes that the S&P 500 Index (SPX-INDEX) could touch the 2,700 level in the next 12 months.

In 2015, global growth (ACWI) slowed down, creating a recessionary situation in the global economy. Many developed markets (EFA) and emerging markets (EEM) suffered a great deal due to this slowdown. However, in 2016, the global markets showed a recovery. Many major events such as Brexit and the US presidential election impacted the market’s performance in 2016.

In 2017, we could see accelerated growth. The S&P 500 Index’s first quarter growth has already demonstrated that earnings growth is accelerating. The EPS (earnings per share) growth of the S&P 500 Index rose nearly 3.3% between January 3 and May 17, 2017. Wilson also discussed the sales growth in the interview. According to a report from the US Census Bureau, 1Q retail e-commerce sales accounted for 8.4% of total sales. In 1Q17, sales growth saw a sharp rise.

Mike Wilson believes that the strong sales growth may continue for the next six or seven quarters. He projected nearly 13% upside for the S&P 500 Index from its level of 2,391 on May 12, 2017.

In the next part of this series, we’ll analyze Mike Wilson’s view on various sectors.

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