US stocks can still rise! Morgan Stanley's famous bearish investor "switches sides" again: the S&P 500 will reach 6500 points next year.

Morgan Stanley strategist Michael Wilson has been known for his bearish views on the US stock market in recent years, but he is optimistic about the outlook for 2025. The strategist predicts that the S&P 500 index will close near 6500 points next year, up 11% from the closing level of 5870 points last Friday, driven by improving economic growth and further rate cuts by the Federal Reserve. He previously forecasted the index to reach 5400 points by mid-2025. Wilson said, "US stock market valuations are high, but improving macroeconomic conditions in the US, the potential for US tariff policies to have a greater negative impact on economic growth in other parts of the world, and animal spirits will drive the stock market higher." He stated that deregulation by the Donald Trump administration will also benefit US companies, although the impact of other potential policies remains unclear. After correctly predicting the stock market sell-off in 2022, Wilson remained bearish during the market rebound until 2023. Earlier this year, he ultimately relented and raised his target for the S&P 500 index, suggesting that the benchmark index could even reach 6100 points by the end of 2024. Fueled by the artificial intelligence boom, unexpected resilience in the US economy, and rate cuts, the US stock market has surged more than 50% since early 2023. In Morgan Stanley's 2025 outlook, Wilson wrote, "With the Fed expected to cut rates next year and business cycle indicators continuing to improve, we expect corporate profit growth to continue to expand." The implementation of the Trump economic agenda may further support market sentiment, but Wilson advises investors to remain flexible in choosing industries and stocks, as the impact of policies such as immigration, trade, deregulation, and government spending remains uncertain. Uncertainty following the election has also led strategists to have a wider range of forecasts for the stock market. In the worst-case scenario, the S&P 500 index could decline by 22% to 4600 points, while in the most optimistic scenario, the index could soar by 26% to 7400 points. Morgan Stanley expects the US stock market to continue outperforming other regions, especially Europe. The Morgan Stanley strategist downgraded European stock markets to neutral. The MSCI Europe index is expected to trade within a range until US trade tariffs and other policies become clearer. Goldman Sachs strategist Peter Oppenheimer recently stated that the total global stock market return rate by the end of 2025, calculated in US dollars, will reach 10%. The Oppenheimer team said, "Stock valuations have already risen, and there is very little room for further valuation increases. We expect index returns to be mainly driven by profit growth."