A report issued by Morgan Stanley predicted a further decline in US stock markets over the next few months.
According to Arabiya Net, the report expected the (S&P500) index to decline by 17% to 27% within the next 4 months.
The S&P 500 is already down 14% year-to-date, but Morgan Stanley believes the market hasn't bottomed yet.
A team of Morgan Stanley analysts, led by Mike Wilson, wrote in a recent note to investors: 2022 now represents a modest earnings contraction (-3% annual growth), although we do not include a recession in this scenario.
Analysts added, Acknowledging the weak performance in stocks year-to-date, we don't believe that the bear market is over if our earnings forecasts are correct.
Analysts expect the S&P 500 to fall to 3,400 by the end of the year.
And in the event of a recession in the economy, they say the benchmark could drop to 3,000 points.
Given that the S&P 500 is around 4107 at the moment, Morgan Stanley forecasts a further decline of 17% to 27%, analysts say.
Despite the pessimistic forecasts, Morgan Stanley analysts believe that Wall Street will still retain some strong and attractive stocks, including (LLY), a giant American pharmaceutical company with a market value of about $300 billion, with its products marketed in 120 countries around the world.
Despite the market's downturn this year, Eli Lilly is not a battered stock. In the first six months of 2022, Eli Lilly's revenue grew 6% year-over-year. Meanwhile, the company's adjusted earnings per share improved by 12% over last year. The stock is actually up about 16% so far in 2022, and Morgan Stanley expects this stock to continue in the same trend.
Morgan Stanley also points to Welltower, a real estate company that does not own luxury shopping malls or luxury office buildings, and instead focuses on healthcare infrastructure and provides real estate capital to major housing operators and post-acute care providers and regulations. health. In the second quarter, the company's revenue grew 29.1% year-on-year to $1.47 billion, and its net operating income increased by 8.7%.
Morgan Stanley is also optimistic about ExxonMobil, saying that thanks to strong oil prices, energy stocks have turned out to be among the best performing companies on Wall Street this year. ExxonMobil is up 53% since the start of the year, after a strong rally in 2021.
In the first six months of 2022, Exxon made $23.3 billion in profits, a massive increase from $7.4 billion in the same period last year. Total free cash flow was $27.7 billion for the first half, compared to $13.8 billion in the same period last year.
