Morgan Stanley vs Goldman Sachs on interest rate moves

Market Overview
Read time 1.9 minutes

Year To Date Performances:

1. The financial world is witnessing a clash of forecasts between Morgan Stanley and Goldman Sachs regarding the Federal Reserve's future interest rate moves. While Goldman Sachs envisions a gradual lowering, starting with a 25-basis-point cut in late 2024 and totalling 175 basis points by mid-2026, Morgan Stanley expects an earlier start in June 2024. They predict a series of consistent 25-basis point reductions from the fourth quarter of 2024 onwards, leading to a rate drop to 2.375% by the end of 2025. On the other hand, Goldman Sachs projects a stabilization of rates between 3.5% and 3.75%, underscoring the deep-seated uncertainty in current economic forecasts.

2. Home Depot's latest earnings report paints a mixed picture, with the company experiencing a 3.1% dip in year-over-year sales at established stores, primarily due to a cooling housing market. Despite this, Home Depot exceeded Wall Street's expectations thanks to robust performance in smaller home improvement projects, a key segment of their business. The company has adjusted its full-year outlook, anticipating a 3% to 4% decline in annual sales, slightly refining its prior forecast of a 2% to 5% drop. Additionally, Home Depot expects a 9% to 11% decrease in earnings per share, tightening the previous range of 7% to 13%. This cautious outlook aligns with a 12% decrease in housing starts in the first nine months of the year, as reported by government data.

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4. Headlines

   1. Banks continue to increase profits as interest rates rise. Wise announced a 280% increase in profits year over year.

   2. The latest inflation figures show a 3.2% rate in the US last month.

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   ¹ Count determined as the number of unique email addresses in StartEngine’s database as of 10-6-2023.}

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