Morgan Stanley says US investors are pricing in too much optimism in equities

<p>Michael Wilson, Morgan Stanley's chief investment officer, sounding the warning on US stock prices again. </p><p>Summary points from a client note:</p><ul><li>Breadth remains weak for S&amp;P 500 and Nasdaq</li><li>AI beneficiaries continue to support </li><li>US investors are pricing in too much optimism in the stock market</li><li>economic growth is set to be weaker than expected</li><li>

"At current prices, markets are now expecting a meaningful re-acceleration in growth that we think is unlikely this year, especially for the consumer, which aligns with our economists' forecast for slowing PCE growth"</li><li>Personal Consumption Expenditures (PCE) index slowed considerably in the second quarter of 2023 and appears to be getting weaker</li><li>"The rally in some of the major averages over the last few weeks may have investors feeling a bit better again but given the underlying weakness in breadth and in some of the more cyclical parts of the market, we think that optimism should be faded"</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.