Damoccan: The strengthening of the US dollar may threaten the rise of US stocks

The Zhitong Finance App learned that Michael Wilson, chief US stock strategist at Morgan Stanley, said that the strengthening of the US dollar may be one of the few obstacles threatening the rise of US stocks. “A stronger dollar may cause the stock market rebound to slow down again,” he said. “This is probably one of the things we are focusing on right now, and it may affect the trend of US stocks reaching new highs over and over again.”

US stocks have repeatedly reached new highs since this year. As investors prepare for a new earnings season, the S&P 500 index hit its 46th all-time closing high in 2024 on Monday. At the same time, however, the Bloomberg dollar index has risen about 2% since the beginning of October, as higher-than-expected inflation and non-farm payrolls data have caused investors to reduce their bets on how fast the Federal Reserve will cut interest rates in the future.

Michael Wilson said that US stocks rose strongly and expanded to different sectors, while being driven by the central bank's relaxation of monetary policy. “This situation will continue until our economy is truly impacted or our liquidity is limited.”

Meanwhile, Bank of America strategists led by Michael Hartnett saw a “sell signal” in global stock markets in a survey conducted from October 4 to 10. According to the survey, fund managers' allocation to stocks increased dramatically, while exposure to bonds declined, and the cash ratio in the global portfolio fell from 4.2% to 3.9%. The strategist said in a report that this is “the biggest increase in investor optimism since June 2020 due to the Federal Reserve's interest rate cut, China's stimulus plan, and a soft landing.”