June 5 (Reuters) – Morgan Stanley warns of a 16% drop in revenue for S&P 500 firms this 12 months, adopted by a pointy rebound in 2024 when analysts say the Federal Reserve’s coverage will turn out to be extra accommodative.
Strategists led by Michael Wilson mentioned in a word on Monday that they count on earnings to rebound sharply, with a 23% bounce subsequent 12 months.
The Wall Road financial institution warned that the EPS of S&P firms may slip to $185 from $195 in 2023 earlier than recovering to $239 subsequent 12 months.
“The growth/bust interval that started in 2020 is presently within the bust a part of the earnings cycle — a dynamic that is not but priced,” Wilson mentioned.
Morgan Stanley predicted the index to rebound to 4,200 ranges in 2024 whereas conserving its 2023-end goal unchanged at 3,900. The index closed at 4,282.37 on Friday.
A slew of optimistic information, with expectations of a Fed pivot, persistent enchancment in liquidity, and AI-related tailwinds to mega-cap names corresponding to Nvidia Corp (NVDA.O), have buoyed indexes thus far, Morgan Stanley mentioned.
Such components have held again a correction in markets, the financial institution added.
Reporting by Roshan Abraham in Bengaluru; Modifying by Dhanya Ann Thoppil
Our Requirements: The Thomson Reuters Belief Rules.
