US stocks beyond the technology giants are poised to report strong earnings this season, broadening the equity rally, according to Morgan Stanley strategists. The team led by Michael Wilson said the median S&P 1500 Composite Index constituent is generating earnings-per-share growth of more than 10%, the best performance since the post-Covid recovery. Analysts continue to upgrade profit estimates for the consumer discretionary and transport sectors, both closely linked with economic growth. The second-quarter earnings season kicks off on Tuesday with reports from the big banks, and analysts expect S&P 500 firms to post a 23% jump in profits, which would be among the best readings ever outside of recoveries from major recessions. The equal-weighted S&P 500 index, which dilutes the impact of the tech behemoths, is outperforming the market-capitalization weighted gauge for the first time since 2022.
Morgan StanleyMorgan Stanley strategist Wilson's positive outlook on earnings broadening beyond tech may boost sentiment for the firm's equity research and trading businesses.
Royal Bank of Canada