Morgan Stanley strategist Michael Wilson said momentum-style equity investing is poised to rebound as sectors with strong earnings replace chip stocks in leading market gains. After one of the worst momentum selloffs in history, Wilson noted the style is rotating toward quality shares with stable earnings, with insurance and healthcare equipment and services stocks increasingly in favor. A Goldman Sachs momentum basket has fallen 35% from its June peak but is up 9.4% year-to-date, in line with the S&P 500. Second-quarter earnings per share growth is running at 29% year-on-year, with S&P 500 companies beating expectations at an 86% rate, the highest in five years. Wilson expects the S&P 500 to reach 8,000 points by year-end, supported by the benchmark’s greater weighting in high-quality stocks and improving breadth in earnings revisions. Goldman’s Ben Snider said the AI trade’s recent consolidation is typical of past momentum rallies, while JPMorgan’s Mislav Matejka expects a continued broadening of market strength and stabilization in semiconductor stocks, with strong earnings remaining a support for equities.
Morgan StanleyMorgan Stanley's strategist predicts earnings-driven momentum rebound and S&P 500 target, which could benefit its trading and advisory businesses.
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