The market could move higher in the next few weeks, but Morgan Stanley’s Mike Wilson warned investors that any rally in the bear market would be temporary. Wilson said in a note Monday it was “hard to justify a sustained return”. The strategist expects that falling commodity prices could be a drag on revisions, especially as earnings season arrives next month. “[We] “The only question is whether we have a soft landing (base case) where the S&P 500 bottoms near 3400-3500 or we have a recession (bear case),” Wilson writes. The index fell to 3000. “Stocks had a big rally last week from this year’s decline. The Dow Jones Industrial Average rose 5.4%, the limit of its first positive week since since May. The S&P 500 is up 6.5% and the Nasdaq Composite is up 7.5% The major averages were little changed in Monday morning trading. Deep oversold conditions, as recession fears continue to grow on Wall Street, falling bond yields and oil prices also boosted gains. In the near-term, stocks could continue to rise, especially is when pension funds rebalance their holdings this week to the end of the quarter. USD equity capital demand part of the United States. A bounce could mean the S&P 500 is up 5% to 7% from Friday’s close, which would put the broader market index in the 4,100-4,200 range. A major rally from the bear market would be particularly beneficial for Nasdaq, which has more exposure to interest rate-sensitive stocks over the longer term. Still, Wilson cautions that temporary rallies are not historically unusual, especially for bear markets that eventually end in recessions. “There is no way we think the bear market is over or earnings estimates will not be reduced,” Wilson wrote. Instead, we are simply being realistic about the viciousness of bear markets and their ability to sometimes confound all market participants, even the bears. ” Traders are expecting continued volatility in the market this week.
