This Wall Street Expert Thinks the Fed Has 'More Room to Cut' Than Most Expect in 2026

Group 1 - The U.S. labor market data indicates a potential end to a rolling recession and the beginning of a new bull market, with the S&P 500 performing strongly this year [1][3] - The Federal Open Market Committee is anticipated to cut rates by 0.25 percentage points, with further cuts possible next year due to ongoing job market challenges, as evidenced by 9,000 job cuts in November [2][6] - Morgan Stanley's bullish outlook on U.S. stocks contrasts with other forecasts of slow growth, suggesting that the Fed's delayed rate cuts could support stock performance [3][4] Group 2 - Earnings growth for S&P 500 constituents is approaching 10%, the highest in four years, providing the Fed with more room to cut rates than previously thought [4][6] - The private sector is experiencing a rolling recession, with individual sectors facing their own downturns rather than a uniform collapse, which may lead to necessary Fed interventions [5][6] - Morgan Stanley projects the S&P 500 to reach 7,800 by the end of 2026, indicating a 14% increase from current levels, with a favorable setup for at least two more rate cuts anticipated [6][7]