**Morgan Stanley’s Market Outlook** Morgan Stanley is optimistic about stocks, especially during market dips. After the latest US jobs report, they expect the Federal Reserve to consider cutting interest rates. They believe any short-term declines will be temporary until more growth data is available. Mike Wilson, Morgan Stanley’s CIO, sees future market corrections as brief opportunities to buy. He thinks we are entering a new phase of growth, characterized by rapid changes and improved earnings forecasts. Consequently, S&P 500 futures rose by 0.6%, and Nasdaq futures climbed by 0.8%, bouncing back from earlier losses. We believe that any upcoming market weakness is a good chance to take a bullish position. The slight dip after the July 2025 jobs report, which indicated a minor slowdown in the job market, may be the only downturn for now. Such quick pullbacks often suggest that the market is preparing to rise. **Federal Reserve’s Potential Rate Cuts** We strongly believe that the Federal Reserve is likely to shift toward rate cuts later this year or early 2026. The latest Core PCE inflation report from June 2025 showed a manageable rate of 2.7%, supporting a trend of decreasing inflation that gives the Fed room to adjust its policy. Historically, markets tend to rise in anticipation of the first rate cut during an easing cycle. For options traders, this market offers a good chance to sell cash-secured puts on major indices or solid tech stocks during minor dips. This strategy allows us to earn premium while the CBOE Volatility Index (VIX) is low at 14, and sets a clear buying price. Low volatility also makes buying puts for protection cost-effective. Another tactic is to use bull call spreads on the Nasdaq 100 or S&P 500, which allows for defined risk while positioning for potential gains over the next 30 to 60 days. This method limits losses but offers leverage if the market rises as expected. Taking long positions on index futures during times of market weakness can also be effective. Our positive outlook is supported by strong corporate performance—a crucial sign at the start of a new bull market. In the Q2 2025 earnings season that just concluded, almost 79% of S&P 500 companies exceeded analyst expectations, indicating they are managing costs and boosting profits. The increase in positive earnings forecasts is quicker than we’ve seen since early 2023. We’re observing a market structure that resembles the recovery after the 2022 bear market. The initial rally was sharp, leaving many sidelined investors unable to enter at favorable prices. This environment often punishes indecision, as the market climbs amidst uncertainty and pullbacks remain brief. Create your live VT Markets account and start trading now.

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