STOCKS | Morgan Stanley Expects U.S. Stock Rally to Broaden Beyond Tech Giants

Morgan Stanley strategists said U.S. stocks beyond the tech giants were likely to post strong results in the current earnings season, helping extend the market rally to a wider set of shares. According to Jin10, the team led by Michael Wilson said the median company in the S&P 1500 Composite Index was seeing earnings-per-share growth of more than 10%, the best performance since the post-pandemic recovery began. The strategists added that analysts were still raising profit expectations for the consumer discretionary and transportation sectors, which they described as closely tied to economic growth. The team said it expected the market’s advance to keep broadening as resilience in median-stock earnings supported gains. The second-quarter earnings season is set to begin on Tuesday, with large banks reporting first. Based on compiled data, analysts expected profits for S&P 500 index constituents to rise 23%, which Morgan Stanley described as among the strongest periods in history outside recoveries following major economic recessions.