The stock market sees a 'no landing' scenario of high growth and sticky inflation ahead, Morgan Stanley says
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The US stock market is eyeing a 'no landing' scenario for the US economy, according to Morgan Stanley. This scenario involves high economic growth and sticky inflation. The stock market is looking past the soft versus hard landing debate and is getting comfortable with the idea of no landing at all for the US economy. Recent data points, such as a drop in US unemployment to 3.8%, a strong reading of the ISM manufacturing index, and a 2.5% increase in annual Personal Consumption Expenditures, support this view. The outperformance of cyclical sectors like energy and materials suggests that the equity market is beginning to process a better growth environment. However, maintaining quality is essential, and if the US economy experiences an early cycle reacceleration in growth, low-quality cyclicals and small caps may outperform. The stock market has been reacting to developments in the macro environment, with consensus views shifting between expectations for a soft or hard landing. The 10-year US Treasury yield is a key indicator of market sensitivity to macroeconomic conditions, with small caps and low-quality stocks showing more sensitivity to rate changes compared to large caps. While rate sensitivity would likely increase more broadly if the 10-year yield were to sustainably move above 4.35-4.40, large cap, quality equities are expected to outperform on a relative basis.
#StockMarket #UsEconomy #EconomicGrowth #Inflation #CyclicalSectors #EquityMarket #Unemployment #IsmManufacturingIndex #PersonalConsumptionExpenditures #10yearUsTreasuryYield
https://markets.businessinsider.com/news/stocks/stock-market-outlook-economy-no-landing-cyclical-stocks-morgan-stanley-2024-4
Markets Insider /
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2024-04-09 23:53:06
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2024-04-09 23:53:06Event JSON
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"content": "The stock market sees a 'no landing' scenario of high growth and sticky inflation ahead, Morgan Stanley says\n==========\n\nThe US stock market is eyeing a 'no landing' scenario for the US economy, according to Morgan Stanley. This scenario involves high economic growth and sticky inflation. The stock market is looking past the soft versus hard landing debate and is getting comfortable with the idea of no landing at all for the US economy. Recent data points, such as a drop in US unemployment to 3.8%, a strong reading of the ISM manufacturing index, and a 2.5% increase in annual Personal Consumption Expenditures, support this view. The outperformance of cyclical sectors like energy and materials suggests that the equity market is beginning to process a better growth environment. However, maintaining quality is essential, and if the US economy experiences an early cycle reacceleration in growth, low-quality cyclicals and small caps may outperform. The stock market has been reacting to developments in the macro environment, with consensus views shifting between expectations for a soft or hard landing. The 10-year US Treasury yield is a key indicator of market sensitivity to macroeconomic conditions, with small caps and low-quality stocks showing more sensitivity to rate changes compared to large caps. While rate sensitivity would likely increase more broadly if the 10-year yield were to sustainably move above 4.35-4.40, large cap, quality equities are expected to outperform on a relative basis.\n\n#StockMarket #UsEconomy #EconomicGrowth #Inflation #CyclicalSectors #EquityMarket #Unemployment #IsmManufacturingIndex #PersonalConsumptionExpenditures #10yearUsTreasuryYield\n\nhttps://markets.businessinsider.com/news/stocks/stock-market-outlook-economy-no-landing-cyclical-stocks-morgan-stanley-2024-4",
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