Working with the Blend Tool
The Blend Tool (W) can be used to morph multiple shapes or multiple colors. Start by opening a new document.
Select the Rectangle tool (M). Change the fill to a dark shade of red and no stroke. Draw a wide rectangle that extends across the entire artboard.
Hold down ALT and the Selection Tool (V) and drag a copy of the rectangle to the bottom of the artboard. Change the color of the second rectangle to bright yellow with no stroke.
Deselect both shapes (Ctrl + Shift +A).
Select the Blend Tool
With the Blend Tool (W), click on the red shape followed by the yellow shape. Illustrator will blend the two shapes and fill in the remaining area between the rectangles with a gradient fade.
You can also blend shapes. Create a circle and a square.
You can control how many steps are created within the blend as well as the spacing of each shape. You can also control the spacing of color.