Why the S&P 500 could rally another 11% by year-end, according to a Morgan Stanley senior portfolio manager

• Despite a downbeat August, the S&P 500 index is still boasting impressive year-to-date gains.
• The benchmark stock-market gauge is up over 17% so far in 2023, and one expert sees it climbing even higher.

The US stock market has enjoyed a strong rally in 2023, with a handful of mega-cap tech stocks boosting the S&P 500 by more than 17% year-to-date.

One expert believes the run could continue even further – predicting the index could reach "closer" to 5,000 points by the end of 2023 – in what would mark an 11% increase from Tuesday's close of 4497. That could also mean the index topping the current record high of about 4,818, reached in January 2022.

"As we get closer to the end of the year, the pain of being underweight equities, and the resultant lack of performance is going to intensify forcing positive fund flows," Andrew Slimmon, managing director and senior portfolio manager at Morgan Stanley Investment Management, told CNBC's "Street Signs Asia" on Tuesday.

A weak run in August has seen stocks pull back slightly from their stunning first half – but Slimmon sees strong third-quarter earnings helping the market resume its advance.

"Year-over-year quarterly earnings are going to inflect from negative to positive after Q3. Historically, this is greeted positively by equities," he told the outlet.

The portfolio manager added that he sees investors flocking to the so-called "Magnificent Seven" group of shares over the next quarter as the summer lull draws to a close.

Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla comprise the set of seven mega-cap tech stocks that have propelled the stock market upward this year, thanks to investor excitement surrounding artificial intelligence.

Despite their already-high valuations, Slimmon sees further room to run.

"As much as these companies have had a very good year to date, they're still below where they ended 2021 – Nvidia's the exception. These companies are lower today than where they ended 2021 because last year was worse than the rally year today," he said.

Nvidia in particular is one of the biggest success stories of 2023, with its share price soaring by 234% year-to-date. Yesterday, its market cap reached an all-time high of $1.2 trillion.