Morgan Stanley cautions that the high valuation of US equities may be affected if aggressive fiscal spending is reduced, following the downgrade of sovereign debt by Fitch. The brokerage highlights the significant fiscal stimulus implemented in response to the COVID-19 pandemic, which has allowed the US economy to outperform expectations. Despite the Federal Reserve's rapid interest rate hikes, some Wall Street strategists anticipate a continued rally for certain US stocks.
MS equity strategist Michael J Wilson noted that massive fiscal stimulus, prompted by the COVID-19 pandemic since its outbreak in 2020, allowed the U.S. economy to grow faster than forecast.
This resilience in the face of rapid interest rate hike by the U.S. Federal Reserve has seen some Wall Street strategists chalking in a continued rally for some U.S. stocks.has already gained 17.2% so far this year, thanks to a handful of technology stocks that have ridden AI prospects high.
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