SP500 index has more room to fall towards 3,000 — Morgan Stanley

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Dollar rises as negative earnings revisions appear to be accelerating lower. Thus, Morgan Stanley strategists expect the index SP500 move back towards the 3,000 point level.

Every 1% change in the dollar has a 0.5% impact on SP500 earnings growth

“On a year-over-year basis, the dollar is up 21% and still going up. Based on our analysis that every 1% change in the dollar has a 0.5% impact on SP500 earnings growth, fourth-quarter earnings of the SP500 will face a growth headwind of about 10% all other things being equal.”

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“The bear equity market will not end until the SP500 reaches the range of our basic and bear targets, ie between 3,000 and 3,400 later this fall.”

Source: Fx Street

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