Morgan Stanley 2026 Outlook: Moderate global economic growth and deflation coexist, uncertainty remains high, but US stocks will still outperform global markets BlockBeats news, November 17th, according to Reuters, Morgan Stanley expects the US stock market to outperform the global market in 2026 and is optimistic about the performance of global stocks relative to credit bonds and government bonds, supported by the growth of AI related capital expenditures and improved policy environment. Driven by micro fundamentals, accelerated AI capital expenditures, and favorable policies, risk assets are ready for strong performance in 2026, "the Wall Street investment bank stated in a series of global economic and strategic outlook reports released on Monday. Despite the Trump administration's wavering tariff policies causing continued volatility in global financial markets this year, most trade uncertainties are gradually dissipating as 2026 approaches. The bank predicts that in 2026, there will be "moderate" global economic growth and deflation in parallel, but emphasizes that "uncertainty remains high and the outcome range may be extremely divergent", and "the United States will become a key variable". In addition, Morgan Stanley expects the S&P 500 index to reach 7800 points by the end of 2026, with approximately 16% upside potential from current levels, mainly driven by steady growth in corporate profits and AI driven efficiency improvements. Under the influence of the Federal Reserve's dovish policy, small cap stocks in the United States will perform better than 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, and then rebound to 99 by the end of 2026. The bank also predicts that the gold price will reach $4500 per ounce by 2026.