The backdrop has many on Wall Street, including Morgan Stanley, updating their forecasts. The major investment firm recently released a midyear update that includes economic targets and shatters hopes for more Federal Reserve interest rate cuts this year.

Investing.com -- Morgan Stanley’s Michael Wilson sees the recent selloff in U.S. equities following Moody’s downgrade of the U.S. credit rating as a potential buying opportunity, driven more by interest rate fears than fundamentals. In a note this week, Wilson emphasized that Moody’s action, while impactful, should be viewed in context.

US equities are likely to drive the global rally in the coming months on an improving corporate earnings outlook and a weaker dollar, according to cross-asset strategists at Morgan Stanley.