A top strategist at the financial giant Morgan Stanley expects the stock market to rally.
Bloomberg reports that Michael Wilson, Morgan Stanley’s chief investment officer (CIO) and chief US equity strategist, says in a new client note that the economy is heading into an “early cycle backdrop” where small-cap stocks could surge.
“We push back on the idea that rate cuts are already priced. We’re respectful of the upcoming weak seasonal window, but remain buyers of dips should they come.”
Wilson does note that inflation data and weak seasonal trends this month could present risks to the stock rally, though he predicts a strong rally into the end of the year.
Last week, Stephen Byrd, Morgan Stanley’s global head of thematic research, unveiled which sectors he thinks are going to benefit the most from the firm’s projected $13–$16 trillion AI-driven boost to S&P 500 market value.
“What’s interesting is you might think that higher-tech sectors would be the biggest winners. But when you look at it relative to the amount of income that companies produce, it was interesting that it was a lot of lower-tech sectors that were the biggest relative winners, areas like consumer services, capital goods, a number of manufacturing-related industries, and healthcare-related industries that have the biggest benefits. Some of those benefits, when we look at full adoption, are greater than 50% of these companies’ pre-tax income.
So it is very big. Though, to be fair, you mentioned the long game. This is the long game. This is not next quarter. This will take multiple years to really fully see developed.”
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