The euro-area economy grew more than expected in the second quarter, but Germany had a surprise contraction.
The Morgan Stanley strategist boosted his target for the S&P 500 to 5,400 points from 4,500.
The firm says investors are getting mixed messages from key economic data.
There are $52 billion of long positions on the S&P 500 and 88% of them are in a loss.
The S&P 500 is already trading 3% above Citigroup's end-year target of 5,100.
Strategist Michael Wilson expects the S&P 500 to drop to 4,500 points.
“Stocks are now trying to move past their dependence on central bank policy,” the strategist said.
Companies have adjusted to higher interest rates and a tepid demand environment, the strategists said.
The firm's analysts see the S&P 500 rising to 5,200 by the end of the year.
The Magnificent Seven of megacap tech stocks doubled in value in 2023.
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