Stock bull cases are growing among Wall Street strategists

Wall Street strategists are not afraid of a summer slowdown in stocks despite some signs of the cooling labor market. slowing economic activity.

Over the past month, several strategists have defended and paid attention to the S&P 500 end-of-year targets in the 6,300-6,500 range. The most disastrous consequences of tariffs may no longer be on the table. On Monday, the benchmark index traded around 6,010.

In a memo entitled “Don’t Fight It,” Morgan Stanley’s chief investment officer Mike Wilson noted that “moderate growth slowdown” is likely already priced earlier this year, when the average S&P 500 shares fell nearly 30%.

“In our experience, the inside of the stock and stock market far outweighs the lag in economic data and revenue outcomes,” Wilson said.

There is certainly one to clarify Signs of softening economic data. Last week, ADP data showed that Private sector added 37,000 jobs In May, the lowest monthly total for more than two years. Weekly applications for unemployment claims have reached the highest level since October 2024. And it has been revealed that the monthly non-farm pay ceremonies have added 95,000 jobs in March and April than originally thought.

However, this data slowdown is widely expected. The Goldman Sachs stock research team analyzed previous “event-driven recessions,” including Dot-Com’s bubble burst and the interest rate shock of the 1970s. Goldman’s team, led by US equity strategist David Costin, found that so-called soft economic data encapsulating data points, such as consumer surveys, usually earns cycle bottoms before hard economic data, such as monthly reads on inflation and job additions.

It has unfolded over the past month. May, the conference committee’s future Expectations The largest increase every month has been seen since May 2009. However, Monday’s data shows that inflation expectations in the New York Federal Reserve monthly survey fell in May for the first time this year, marking perhaps the worst tariff-driven inflation fears that could lie behind the market.

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Kostin’s research shows that the S&P 500 typically provides higher returns on soft data, even when hard economic data, such as the monthly Jobs report, continues to decline.

“The S&P 500 returns are now more correlated with soft data than hard data,” wrote Kostin, who predicts the S&P 500 to reach 6,500 in the next 12 months. “If soft data recovery is maintained, it should support stock returns even if hard data is weakened.”