Stock market today: Dow, S&P 500, Nasdaq mixed as PPI inflation data comes in hot

Morgan Stanley raised its year-end target for the S&P 500 to 8,000 from 7,800, citing an unexpectedly strong earnings season that has powered the benchmark to record highs.

Growth to 8,000 would represent a roughly 8% upside over the index’s 7,400 close on Tuesday. Growth to the bank’s updated 12-month outlook target of 8,300 would represent 12% growth for the index.

“Our bullish index view is an ⁠earnings story, not a multiple expansion one,” Morgan Stanley analysts led by Mike Wilson said. “Over the next 12 months, we see the rolling recovery continuing to progress, driven by a strong ‌earnings ⁠environment as positive operating leverage persists and is further enhanced by AI adoption.”

First quarter profits for companies in the S&P 500 have grown 27% throughout the season, far above the 12% analysts had expected, according to Bloomberg. Roughly 83% of the 440 S&P 500 companies that reported earnings up to May 8 have beaten analyst estimates, Reuters noted.

The heightened outlook from one of Wall Street’s major banks comes even as geopolitical turmoil has wrangled the global market, with the war in Iran, US-China relations, the AI build-out, and complications for the Federal Reserve all in focus.

Resiliency throughout that chaos — “despite geopolitical risk, private credit concerns and AI disruption” — is “supportive of our view,” the bank’s analysts wrote.