Morgan Stanley strategists estimated S&P 500 to rise above 4,000-4,150 on a tactical rally in the coming weeks considering its oversold conditions.
The firm noted that the slightest whisper of a potential Fed pivot was enough for equities to stage a rally as the S&P 500 index closed last week up by 4.7%.
“While that seems like an awfully big move, it would be in line with bear market rallies this year and prior ones,” Morgan Stanley’s strategist Mike Wilson wrote in a note.
Despite core consumer prices that rose to a 40-year high last month, prompting the market to highly expect an aggressive move by the U.S. Federal Reserve, Welson believed that inflation has now peaked and could fall rapidly next year.
