Morgan Stanley indicates that U.S. stocks may have bottomed out and recommends beginning to increase allocations, with particular favor for cyclical sectors and high-quality growth stocks.
Strategists led by Michael Wilson wrote in a report: "We believe the S&P 500 is forming a bottom, making it a reasonable time to start increasing exposure to cyclical and high-quality growth names—areas where earnings remain robust, valuations have compressed, and market sentiment is bearish."
Their top sector picks include financials, consumer discretionary, and hyperscale cloud computing technology companies.
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