Apart from the major indexes like the S&P 500, markets are behaving like it is late in the cycle, says Morgan Stanley strategist

You would have a hard time convincing someone looking at the major U.S. stock-market benchmarks that it is looking like the end of the cycle.

The S&P 500

SPX, +0.18%,

for instance, has registered 12 record closes this year, climbed 15 out of the last 19 weeks and has gained 23% from its 52-week low.

Yet Andrew Sheets, chief cross-asset strategist at Morgan Stanley, says there are late-cycle indicators in current markets.

“Historically, in the ‘downturn’ phase of our indicator, long-dated bonds outperform stocks. Defensive and large-cap equities (modestly) outperform cyclicals and small-caps. U.S. stocks (modestly) outperform those in the rest of the world. Investment grade credit returns more than high…

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