US stocks have pulled back in recent weeks after roaring to new highs at the start of the year. In the view of Lisa Shalett, Chief Investment Officer, Wealth Management at Morgan Stanley, positive rates of change are bound to slow, which means markets may move sideways for a while.
See – S&P 500 Index: Bull market is intact but the correction has further to go – Morgan Stanley
“Interest rates may be near their peak. With the 10-year Treasury yield at 1.6%, up from 0.5% last August and near Morgan Stanley’s year-end 2021 forecast of 1.7%, we also expect market volatility to recede.”
“Once the year-over-year rates of positive change in key measures of economic and earnings growth and Fed stimulus start to decline, they may fall dramatically, which could negatively affect market sentiment. These transitions could cause US equity prices to move sideways, as investors adjust to a slower rate of growth than they had experienced the year before.”