Morgan Stanley's chief investment officer, Mike Wilson, has offered a stock market playbook for three potential economic scenarios in 2024, providing investors with insights into how to navigate each outcome.
Morgan Stanley's Investment Chief Listed Three Ways the Economy Can Play Out in 2024
According to Business Insider, Wilson believed this year's economy could experience a soft landing with weak growth, a soft landing with rising growth, or a recession.
In the first scenario of a soft landing with weak growth, he recommends studying individual stocks rather than focusing on broader market trends. Cyclicals and defensive sectors like utilities would likely perform better in this scenario, as well as less volatile stocks like large caps.
The second possible outcome is a soft landing with a reacceleration in the economy, considered the bull case, according to Wilson, who suggests this scenario gained probability after the Federal Reserve meeting last December.
In this scenario, small caps have the potential to shine, as well as cyclicals and economically sensitive industries, such as restaurants and leisure also doing well.
READ ALSO : Dow Jones Hits an All-Time High After Federal Reserve Signals Interest Rate Cuts Next Year
Morgan Stanley Also Predicts a Recession
On a less optimistic note, a recession is looming, with economists putting the odds at 30% over the next 12 months, according to Wilson.
Defensive stocks like healthcare and utilities typically perform well when the economy plunges. Large-cap stocks, which are more stable, also perform better than small caps in this scenario.
Morgan Stanley is among the less bullish voices on Wall Street and more cautious in its forecast, projecting the S&P 500 ending this year at 4,500, while others have called for a rise above 5,000.
Despite different opinions, Morgan Stanley's investment chief has offered strategic insights on navigating the stock market amid economic uncertainty this year.
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