Morgan Stanley: Confidence in the Current Bull Market Remains Strong, U.S. Stock Rally to Further Broaden

June 15 – A Morgan Stanley strategist stated Tuesday that the U.S. stock market may get an extra lift from fund rotations into cyclical, economically sensitive sectors, which lagged during the Iran conflict. The strategist pointed out that rising traffic in the Strait of Hormuz, alongside signs of easing pressure from interest rates, oil prices, and the U.S. dollar on equities, are expected to push undervalued stocks to the forefront of the market’s leaders. Previously, the market rally has been heavily concentrated in high-growth tech stocks. The S&P 500 Index is currently roughly 2% away from its all-time high. The strategist also added that the recent pullback in the U.S. stock market has been led by semiconductor stocks, driven mainly by a slowdown in earnings momentum rather than worsening fundamentals. In a bull market fueled by earnings growth, such pullbacks after a stretch of strong gains are par for the course. “There may still be more volatility in the weeks ahead, but our confidence in this current bull market remains intact,” he said.