Morgan Stanley: A weaker dollar may reverse capital flows, and there is room for a Rebound in the S&P 500.

Jin10 data March 24th, Morgan Stanley strategist Michael Wilson and others believe that a weaker dollar will improve the earnings outlook for the U.S. stock market, which could potentially reverse the large-scale capital flow shift that has been occurring in global markets since the beginning of this year. They stated that, compared to international developed market stocks, the relative performance of the U.S. stock market may once again take the lead. This is because a weaker dollar should help boost expectations for U.S. corporate earnings, thereby encouraging capital to flow back into the U.S. A Citigroup index shows that since the beginning of this year, analysts’ downgrades of U.S. corporate earnings have outnumbered upgrades. However, Wilson believes that there are signs that this trend has begun to change. He stated that the adjustments in earnings expectations for the so-called “seven giants” tech stocks that drove last year’s stock market rise may have reached a bottom, which could help attract capital back to the U.S. Morgan Stanley’s team believes that there is tradable rebound space around 5500 points for the S&P 500 index, and strategists wrote that oversold momentum indicators, strong seasonal performance, and end-of-quarter capital flows will also support the stock market rebound, although market fluctuations may still continue.