Morgan Stanley Raises S&P 500 Target to 8,000, Says Rally Does Not Need Fed Rate Cuts

Morgan Stanley raised its year-end S&P 500 target to 8,000 from 7,800, saying U.S. equities can reach new highs even without Federal Reserve rate cuts over the next year. The firm’s team led by chief U.S. equity strategist Mike Wilson also set a mid-2027 target of 8,300. The S&P 500 closed at 7,400.96 on May 12, 2026, its second-highest level on record and about 17% above its March 30 low. Morgan Stanley said markets have already repriced major risks, including the Iran war, higher oil prices, AI disruption and private-credit stress. About half of Russell 3000 constituents fell more than 20% at their worst levels, while the S&P 500’s forward 12-month P/E contracted 18% from its peak. The bank said the main downside risk is renewed Fed tightening if inflation accelerates. Its bear case puts the S&P 500 at 5,900, while stronger AI-led productivity and earnings could lift the index to 9,400.