According to TechFlow TechFlow, on June 15, Morgan Stanley strategists stated that US stocks may receive an additional boost as funds rotate to cyclical, economically sensitive sectors that underperformed during the Iran war.
A team led by Michael Wilson points out that reports of increased traffic in the Strait of Hormuz, along with signs that the drag on stocks from interest rates, oil prices, and the dollar may be easing, could propel undervalued stocks into the market's leading ranks, after previous gains were heavily concentrated in high-growth technology stocks. The S&P 500 is currently only about 2% away from its all-time high.
Wilson stated that the recent pullback in the US stock market was primarily led by memory chip stocks, due to slowing earnings momentum rather than a deterioration in fundamentals. Such pullbacks are common in bull markets driven by earnings growth, following a period of strong gains. Wilson said, "The market may still experience more volatility in the coming weeks, but our confidence in the current bull market remains unshaken." (Jinshi)
