Morgan Stanley’s Andrew Slimmon: ‘It’s hard to see the market correcting between now and year-end.’”
The S&P 500 has rebounded from last week’s dip, which briefly erased its U.S. election bump but left the index on track for a strong 2024 finish.
The outcome of the November 5 election could amplify the ongoing bull market, with the S&P 500 poised to rise more than 20% for a second consecutive year, according to Andrew Slimmon, senior portfolio manager for U.S. equities at Morgan Stanley Investment Management. Speaking by phone, Slimmon noted the index’s resilience, which saw a 0.4% gain on Tuesday after a 2.1% decline the prior week. The previous week’s 4.7% rally had been fueled by the election results.
“I can’t help but wonder whether this election is pulling forward the bull market’s returns as we move into its third year,” said Slimmon, referencing the S&P 500’s recovery from its October 2022 bear-market low. While the average bull market lasts around 4.5 years, Slimmon expects 2025 could be a particularly strong year for equities. Citing John Templeton’s famous market cycle adage—“bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria”—Slimmon believes stock-market optimism is rising, fueled by robust economic growth and optimism following Donald Trump’s election win.
Investor sentiment has shifted dramatically in 2024, evolving from recession fears to expectations of sustained economic growth without a downturn. Inflation has eased significantly, leading the Federal Reserve to begin cutting rates in September, marking its first rate reductions since 2020.
As a result, U.S. equities have rallied strongly this year. The S&P 500 has jumped approximately 24% year-to-date, with gains of 3.7% in November alone, placing the index just 1.4% below its all-time high, according to FactSet. The Dow Jones Industrial Average and Nasdaq Composite have similarly posted record-breaking gains.
Slimmon remains bullish on cyclical sectors, such as financials and industrials, which are poised to benefit from pro-growth policies under the President-elect. However, some investors worry that potential tariff increases could act as a headwind. Trump has proposed a 10% tariff on all imports and a 60% tariff on Chinese goods, but Slimmon expects these to be used strategically rather than implemented at levels that could cause inflation to spiral.
“Seasonally, this time of year typically doesn’t see significant pullbacks,” Slimmon said, reinforcing his confidence that the market is unlikely to correct before year-end.
