Morgan Stanley 2026 Outlook: Moderate Global Economic Growth and Disinflation, U.S. Stocks Will Continue to Outperform Global Markets

ChainCatcher news, according to Reuters, Morgan Stanley expects US stocks to outperform global markets in 2026 and is optimistic about the performance of global equities relative to credit and government bonds. Their rationale is based on the growth of capital expenditures related to artificial intelligence and an improving policy environment.

"Driven by micro fundamentals, accelerated AI capital expenditure, and favorable policy, risk assets are ready for a strong performance in 2026," the Wall Street investment bank stated in a series of global economic and strategic outlook reports released on Monday. Although the Trump administration's fluctuating tariff policies have caused continued volatility in global financial markets this year, most trade uncertainties are gradually dissipating as 2026 approaches.

The bank forecasts that 2026 will see "moderate" global economic growth alongside deflation, but emphasizes that "uncertainty remains high, and the range of outcomes could be extremely divergent," with "the US being the key variable."

In addition, Morgan Stanley expects the S&P 500 Index to reach 7,800 points by the end of 2026, representing about 16% upside from current levels, mainly driven by robust corporate earnings growth and AI-driven efficiency improvements. Under the influence of dovish Federal Reserve policies, US small-cap stocks are expected to outperform large-cap stocks, and cyclical sectors will outperform defensive sectors. The US Dollar Index is expected to fall to 94 in the first half of the year, then rebound to 99 by the end of 2026.

The bank also predicts that the price of gold will reach $4,500 per ounce in 2026.