A bot of another ICYMI, this time Morgan Stanley analysts warn that companies are facing the highest level of uncertainty since the early days of the pandemic. This growing murkiness is pressuring earnings estimates and accelerating downward revisions.
A key source of unease is President Donald Trump’s unpredictable tariff policy, which has left many firms struggling to plan effectively. Although there is currently a 90-day pause on some reciprocal tariffs, blanket 10% levies and targeted duties on steel, autos, and aluminum remain, while U.S. tariffs on Chinese imports have surged to at least 145%. China has retaliated with 125% duties of its own.
Meanwhile, the Federal Reserve has adopted a cautious stance, holding off on interest rate cuts as it awaits clearer signals on the economic fallout from trade tensions. Trump has responded with renewed threats to remove Fed Chair Jerome Powell.
Given these headwinds, Morgan Stanley expects the S&P 500 to remain range-bound between 5,000 and 5,500 in the near term, citing limited catalysts for a breakout in either direction.
Too many policy flip flops via tweet is not helping.
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