Michael Wilson of Morgan Stanley sees S&P 500 to keep trading in 5,000–5,500 range

Last week, the S&P 500 index tested the upper and lower boundaries of the 5,000–5,500 point range. On Friday, the index closed above 5,500 due to traders' optimism about a potential tariff agreement with China and their anticipation of monetary policy easing by the Federal Reserve (Fed).

However, Morgan Stanley's chief US equity strategist Michael Wilson believes that several key changes are required for the S&P 500 to surpass the 5,600–5,650 resistance zone. These include significantly reducing the current tariff rates as part of a deal with China, implementing looser Fed policies, achieving long-term bond yields below 4% without signs of a recession, and improving the earnings outlook.

Until these factors show a clear risk-off change, S&P 500 will keep trading in the 5,000–5,500 point range.

Stock markets anticipated a moderate slowdown in economic growth. However, they did not factor in a significant downturn in the labor market. Until there are clear signals of labor market stabilization within a few months, the risk of a moderate recession in the US will remain elevated.

Nevertheless, first-quarter earnings per share (EPS) growth was above historical averages, which provided some support to the market.