logo
Morgan Stanley, Goldman expect resilient economy to support stocks

Morgan Stanley, Goldman expect resilient economy to support stocks

Business Times8 hours ago

WALL Street strategists are growing optimistic about US stocks, with forecasters at Morgan Stanley and Goldman Sachs Group Inc the latest to suggest resilient economic growth would limit any pullback over the summer.
Morgan Stanley strategist Michael Wilson, who ditched his long-standing bearish call in mid-2024, said a sharp improvement in corporate America's earnings outlook bodes well for the S&P 500 Index into the year-end. He reiterated his 12-month price target of 6,500 points, implying gains of about 8 per cent from current levels.
'We have high conviction that the sharp drawdown in April was the end of a much longer correction that began a year ago with the peak rate of change on earnings revisions breadth,' he wrote in a note. A pick-up in analyst upgrades 'keeps us positive on US equities on a 12-month basis'.
The S&P 500 has rebounded after President Donald Trump paused some of the highest tariffs in a century in April. Recent data signalling a healthy labour market has also fuelled the rally, putting the index about 2 per cent below a February record high. Still, the benchmark has trailed international peers this year, given the trade-related uncertainty.
A slate of strategists including at JPMorgan Chase & Co. and Citigroup Inc have raised their year-end targets for the S&P 500 in recent days, on bets that the worst shock from Trump's trade war was over. For JPMorgan, the upgrade implies no more gains for the gauge through the remainder of 2025, but still represents an about-turn from its previous target that called for a 12 per cent slump.
Over at Goldman Sachs, strategist David Kostin said recent market action suggests investors are pricing an optimistic growth outlook, with economically-sensitive sectors outperforming safer defensive peers.
This raises the risk of near-term equity declines should macro data deteriorate, he said, but 'the market continues to gain confidence as a result of improving soft data and friendly policy news from Washington'.
'If the recovery in soft data is sustained, it should support equity returns even as hard data weakens,' he wrote in a note. BLOOMBERG

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Apple faces AI, regulatory challenges as it woos software developers
Apple faces AI, regulatory challenges as it woos software developers

CNA

timean hour ago

  • CNA

Apple faces AI, regulatory challenges as it woos software developers

CUPERTINO, California :Apple is facing an unprecedented set of technical and regulatory challenges as some of its key executives kicked off the company's annual software developer conference on Monday. On the technical side, many of the long-awaited artificial-intelligence features Apple promised at the same conference a year ago have been delayed until next year, even as rivals such as Alphabet's Google and Microsoft woo developers with a bevy of new AI features. Those unfulfilled promises included key improvements to Siri, its digital assistant. On the regulatory front, courts in the U.S. and Europe are poised to pull down the lucrative walls around Apple's App Store as even some of the company's former supporters question whether its fees are justified. Those challenges are coming to a head at the same time U.S. President Donald Trump has threatened 25 per cent tariffs on Apple's best-selling iPhone. Apple's shares are down more than 40 per cent since the start of the year, a sharper decline than Google and also lagging the AI-driven gains in Microsoft shares. Apple has already launched some of the AI features it promised last year, including a set of writing tools and image-generation tools, but it still relies on partners such as ChatGPT creator OpenAI for some of those capabilities. Bloomberg has reported that Apple may open up in-house AI models to developers this year. But analysts do not believe Apple yet has what technologists call a "multi-modal" model - that is, one capable of understanding imagery, audio and language at the same time - that could power a pair of smart glasses, a category that has become a runaway hit for Meta Platforms. Google said last month it would jump back into this category, with partners. Such glasses, which are far lighter and cheaper than Apple's Vision Pro headset, could become useful because they would understand what the user is looking at and could help answer questions about it. While Apple has focused on its $3,500 Vision Pro headset, Google and Meta have seized on the smart glasses as a cheaper way to deploy their AI software prowess against Apple in its stronghold of hardware. Meta Ray-Bans all sell for less than $400. Analysts say Apple needs to answer that challenge but that it is not likely to do so this week. "I'm not trying to replace my phone - this is a complementary thing that gives me more world context, because it's got a camera and it sees what I see, and I can talk to it in natural language," said Ben Bajarin, CEO of technology consultancy Creative Strategies. "Apple is not positioned to do that." To be sure, Apple's rivals are not decisively ahead in smart glasses. Anshel Sag, principal analyst with Moor Insights & Strategy, said Meta's Ray-Bans still lack some features and Google has not yet landed its "Gemini" model in a mass-market pair of glasses yet. "Meta has the undisputed lead, but Google is catching up fast and probably has the best-suited AI for the job," Sag said. "Vision Pro is great, but it's a showroom product that developers can use." But Bob O'Donnell, CEO of TECHnalysis Research, said it remains far from clear that smart glasses will gain wide acceptance. O'Donnell also said it is not certain that Apple is at any particular disadvantage if it partners with a company such as Google, OpenAI or even a smaller firm like Perplexity for core AI technology. So far, O'Donnell said, there is not yet strong evidence that consumers are basing major hardware-purchasing decisions on AI features.

US-China trade talks in London hang over markets
US-China trade talks in London hang over markets

Business Times

time3 hours ago

  • Business Times

US-China trade talks in London hang over markets

[LONDON] US-China trade talks in London held markets' attention on Monday (Jun 9), with Asian stocks rising, Wall Street mixed and Europe dipping. The London negotiations, following on from a first round in Geneva last month, aim to quell renewed tariff tensions between Washington and Beijing. New York's Dow and S&P 500 indices were lower, while the tech-heavy Nasdaq rose slightly in early trading. Asian shares closed up on hopes of a deal, and catching up with Wall Street from Friday, when US jobs data suggested the American economy was doing well, for now. The US dollar, however, was largely unmoved, with persistent fears of higher US inflation in the pipeline from Trump's generalised tariffs weighing on it. London, Paris and Frankfurt indices were all lower. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up While the US economy was showing resilience, official data on Monday showed China's exports to the US last month grew at a slower pace than expected, even as they picked up to the EU and Asia. The US-China talks took place following a call between US President Donald Trump and Chinese President Xi Jinping last Thursday. They sought a de-escalation after each had accused the other of violating terms of a tariffs reprieve struck in Geneva in mid-May. The US side in London on Monday was being led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, while Vice Premier He Lifeng headed the Chinese team. Their meeting was helped by news that Beijing on Saturday approved some applications for rare-earth exports, while US aviation giant Boeing is to start sending commercial jets to China for the first time since April. Easing China's export controls on rare-earths was key for Washington, 'while China wants the US to rethink immigration curbs on students, restrictions on access to advanced technology including microchips, and to make it easier for Chinese tech providers to access US consumers,' said Kathleen Brooks, research director at XTB. 'The outcome of these discussions will be crucial for market sentiment,' she said. The US dollar's weakness came as economists warned that Trump's tariffs on most of the world could reignite inflation, and as the US Federal Reserve weighs whether to lower interest rates. 'The May minutes and recent comments by several (policy board) members... suggest the Fed is highly attentive to the risk that tariffs will lead to a persistent inflation shock,' wrote analysts at Bank of America. In corporate news, entertainment giant Warner Bros Discovery announced plans to split into two publicly traded companies, sending its share price higher by more than 9 per cent. One would be a Streaming and Studios company covering film and TV production and catalogues, and the other a Global Network company with television brands including CNN and Discovery, and free-to-air channels in Europe. US semiconductor maker Qualcomm also announced it was buying a UK firm, Alphawave, for US$2.4 billion as demand for database infrastructure heated up from demand in the AI sector. Alphawave shares in London jumped more than 22 per cent on the news. Qualcomm's shares rose three per cent in New York. AFP

US-China trade talks in London hang over markets
US-China trade talks in London hang over markets

CNA

time3 hours ago

  • CNA

US-China trade talks in London hang over markets

LONDON: United States-China trade talks in London held markets' attention on Monday (Jun 9), with Asian stocks rising, Wall Street mixed and Europe dipping. The London negotiations, following on from a first round in Geneva last month, aim to quell renewed tariff tensions between Washington and Beijing. New York's Dow and S&P 500 indices were lower, while the tech-heavy Nasdaq rose slightly in early trading. Asian shares closed up on hopes of a deal, and catching up with Wall Street from Friday, when US jobs data suggested the American economy was doing well, for now. The dollar, however, was largely unmoved, with persistent fears of higher US inflation in the pipeline from Trump's generalised tariffs weighing on it. London, Paris and Frankfurt indices were all lower. While the US economy was showing resilience, official data on Monday showed China's exports to the US last month grew at a slower pace than expected, even as they picked up to the European Union and Asia. The US-China talks took place following a call between US President Donald Trump and Chinese President Xi Jinping last Thursday. They sought a de-escalation after each had accused the other of violating the terms of a tariffs reprieve struck in Geneva in mid-May. The US side in London on Monday was led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, while Vice Premier He Lifeng headed the Chinese team. Their meeting was helped by news that Beijing on Saturday approved some applications for rare-earth exports, while US aviation giant Boeing is to start sending commercial jets to China for the first time since April. Easing China's export controls on rare-earths was key for Washington, "while China wants the US to rethink immigration curbs on students, restrictions on access to advanced technology, including microchips, and to make it easier for Chinese tech providers to access US consumers", said Kathleen Brooks, research director at XTB. "The outcome of these discussions will be crucial for market sentiment," she said. The dollar's weakness came as economists warned that Trump's tariffs on most of the world could reignite inflation, and as the US Federal Reserve weighs whether to lower interest rates. "The May minutes and recent comments by several (policy board) members ... suggest the Fed is highly attentive to the risk that tariffs will lead to a persistent inflation shock," wrote analysts at Bank of America. In corporate news, entertainment giant Warner Bros Discovery announced plans to split into two publicly traded companies, sending its share price higher by more than 9 per cent. One would be a Streaming and Studios company covering film and TV production and catalogues, and the other a Global Network company with television brands including CNN and Discovery, and free-to-air channels in Europe. US semiconductor maker Qualcomm also announced it was buying a United Kingdom firm, Alphawave, for US$2.4 billion as demand for database infrastructure heated up from demand in the artificial intelligence sector.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store