Morgan StanleyIt lowered its recommendations for the US stock market to a reduction in holdings, and adjusted global stock ratings to the same level of weight, on the grounds that economic growth by the end of October faced “huge risks.”

Strategists, including Andrew Sheets, wrote in a report on Tuesday that the tension between increased cases of the coronavirus Delta variant, higher inflation expectations, low yields, and loose monetary policies is having an impact.

While this investment bank remains cautious about the US stock market, the S&P 500 index has outperformed global stock markets and repeatedly reached new highs this year, even though COVID-19 cases have begun to rise again in many regions of the world, and the Federal Reserve is close to formulating a path to reduce stimulus.

Morgan Stanley said that in the global allocation, they are more optimistic about European and Japanese stocks. “We bought Brazilian stocks, sold gold, and shorted US bonds for a long time because we thought the market was too pessimistic about growth expectations,” they added.

They highlighted five key topics for investors to consider: central bank policy differences, vaccination actions, valuation differences, the reappearance of the 2004 credit market scenario, and a recovery in service consumption.