After a sharp stock rally this year on the back of resilient economic growth, investors now have a more negative outlook for risk assets in 2024, according to Morgan Stanley’s Michael Wilson.

The strategist — who has retained his bearish view on equities in 2023 despite a 16% advance for the S&P 500 — said there’s a growing debate among clients about whether a recession has been avoided altogether or if it has just been delayed until 2024.

“The majority of investors we’ve spoken with are in the ‘pushed out’ camp and are of the view that 2024 is now looking like a more challenging year for risk assets relative to 2023,” Wilson wrote in a note.

The rally in US stocks in 2023, driven by bets of peaking interest rates and better-than-expected economic growth, defied bearish forecasts coming into the year. A slate of strategists including Societe Generale’s Manish Kabra and BNP Paribas SA’s Greg Boutle recently boosted their year-end targets for the S&P 500. Wilson’s latest year-end target still implies a more than 10% drop for the benchmark.

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