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May 21 - Morgan Stanley (NYSE:MS) lifted its view on U.S. equities to Overweight, citing sturdy corporate profits, dovish central banks and a softer dollar, the firm said Tuesday in its mid-year global strategy outlook.
The bank now expects the S&P 500 to climb to 6,500 by the second quarter of 2026, driven by steady earnings-per-share gains through 2027. We favor U.S. over non-U.S. stocks as we see earnings revisions bottoming soon and dollar weakness boosting multinationals, Morgan Stanley wrote.
While maintaining an Equal Weight rating on global equities overall, the firm's analysts raised their stance on core fixed income alongside U.S. shares. They remain cautious on other regions, keeping European and Japanese equities at Equal Weight and underweighting emerging markets, where rising local currencies and tariff exposure could pinch margins.
Despite forecasting further dollar declines, the report pushed back against the idea that foreign investors will abandon U.S. assets. It also reiterated that the global economy is not in recession, projecting real GDP growth to ease to 2.5% by end-2025 from 3.5% a year earlier, with inflation moderating to around 2.1%.
This article first appeared on GuruFocus.