Morgan Stanley predicts 16% earnings drop to halt stock market rally.

Morgan Stanley warns that the recent rally in the US stock market is likely to end soon due to a slump in corporate earnings, with earnings per share for the S&P 500 expected to tumble 16% this year. The bank expects the S&P 500 to end the year at 3,900, down more than 9% from Monday's open of 4,287. Despite sticky inflation, rising interest rates, and the looming threat of a recession, stocks rallied in the first half of 2023, boosted by optimism about the debt-ceiling deal that President Biden inked over the weekend, as well as gains from big tech companies, including Apple.