Dama's Chief US Stock Strategist: A stronger dollar may threaten the rise of US stocks

Mike Wilson (Mike Wilson), the chief US stock strategist at Morgan Stanley (Morgan Stanley), believes that the strengthening of the US dollar is one of the few obstacles that may hinder the prosperity of the stock market. The stock market boom has set a series of records for the US stock market.

On Monday, as investors prepared for the latest round of corporate earnings, the S&P 500 index hit its 46th all-time closing high since 2024.

In a radio interview on Tuesday, Wilson said, “The strengthening of the US dollar is one of the factors that may slow down gains again.”

The Bloomberg US Dollar Index is an indicator of the relative strength of the US dollar compared to other currencies. It has risen about 2% since the beginning of October last year because investors have reduced their bets on the future pace of interest rate cuts by the Federal Reserve.

He added: “This is probably one thing we're watching right now, and it could have an impact on the new records every day.”

Wilson said that under the impetus of the relaxation of monetary policies by central banks, the stock market rallied strongly, and the increase spread to different sectors of the stock market. “This will continue until we experience a real shock in the economy or we are limited in terms of mobility,” he said.

Meanwhile, Bank of America Corp. (Bank of America Corp.) strategists led by Michael Hartnett (Michael Hartnett) discovered in a survey conducted from October 4 to October 10 that global stock markets showed a “sell signal.” According to the survey, fund managers' allocation to stocks surged, while investment in bonds declined, and the cash ratio in the global portfolio fell from 4.2% to 3.9%.

The strategists wrote in a report on Tuesday that this is “the biggest jump in investors' optimism about the Fed's interest rate cut, China's stimulus policy, and a soft landing since June 2020.”