US stocks violently rebounded by 30%! Wall Street bears overnight revised their reports, as the "stubborn bulls" made a comeback to achieve greatness

According to Zhitong Finance APP, while most Wall Street forecasters turned pessimistic during the panic sell-off in April, Morgan Stanley's Michael Wilson and former Wells Fargo strategist Christopher Harvey maintained a bullish stance against the trend. Now, the market has proven them right.

Since the sell-off in April, the U.S. stock market has largely ignored the economic risks posed by President Donald Trump's trade war and instead has climbed to historic highs. This surge is attributed to bets on advancements in artificial intelligence technology and lower-than-expected tariff rates. The latest round of gains was fueled by an inflation report that reinforced expectations that the Federal Reserve would resume interest rate cuts next month.

The S&P 500 index has risen 30% from its low in April, forcing sell-side strategists who abandoned their bullish views in April to change their stance again and raise their forecasts to keep up with the rapid surge that few anticipated.

Dave Mazza, CEO of Roundhill Investments, stated, "When market news turns negative, it's easy for people to retreat, but this is often when discipline is most important. Great strategists believe in their methods rather than the market's volatility. And now, for those who did not retreat, this discipline appears very wise."

Wall Street firms repeatedly adjust their forecasts for U.S. stocks.

Wilson maintains a 12-month target for the S&P 500 index at 6,500 points, slightly above the current level of the index, and advises clients to buy on dips. Harvey, on the other hand, keeps his year-end forecast at 7,007 points, one of the highest predictions among Wall Street forecasters, as he expects interest rate cuts and regulatory easing to drive the stock market higher.

Harvey stated last month before leaving Wells Fargo, "We have already seen Trump 1.0. We know his style—go all out and then pull back. Moreover, the fundamentals remain strong." He added that this is mainly due to the strong performance of large technology companies.

Meanwhile, Wilson attributes his optimism to a sentiment indicator from Morgan Stanley, which showed a "clear sell-off" on April 7. Additionally, the breadth of earnings per share revisions has rebounded significantly, measuring the number of analysts raising rather than lowering their earnings per share expectations.

Wilson said on Wednesday, "Considering these two indicators, the market rebound momentum will be quite strong. We anticipated this sell-off in our initial forecast for 2025—at that time, we expected the new government to announce aggressive policies in the first half of the year. They did so, but the actions were faster and more intense than we expected."

The stock market crash in April shook the confidence of forecasters who had optimistic expectations at the beginning of the year. In December last year, the 19 strategists tracked by Bloomberg predicted an average increase of 13% for the S&P 500 index this year, reaching 6,614 points. By May, these strategists had significantly lowered their expectations to just a 2% increase, marking the fastest downward revision since the onset of the pandemic in 2020 By June, many people had turned bullish again. On Wednesday, the S&P 500 index closed at 6466.58 points, with a year-to-date increase of 10%.

Some well-known bulls, including BMO Capital Markets strategist Brian Belski and Deutsche Bank's Binky Chadha, also correctly predicted that the stock market would recover by the end of the year. However, even so, they adjusted their forecasts in April, lowering the predicted value of the S&P 500 index to reflect the index's approach to a bear market due to continued significant declines.

Such changes are rare, as strategists typically analyze from a long-term perspective, relying on models designed to predict market performance. However, during the Trump administration, this approach frequently encountered setbacks due to his frequent policy changes that continually altered market prospects.

The steadfast optimism of Wilson and Harvey now seems prescient, especially as peers at Goldman Sachs, Citigroup, and Bank of America had to change their outlooks.

Dan Greenhaus, chief economist and strategist at Solus Alternative Asset Management, stated, "When examining the risk asset market from a top-down perspective, it is necessary to balance two often conflicting frameworks: short-term volatility and mid-term fundamentals. While we often say to ignore the former, occasional short-term fluctuations can impact the fundamentals. The ability to discern the timing of volatility transmission—especially determining when it will not transmit—often decides whether an investor becomes 'famous in one battle' or 'exits in obscurity.'"