Morgan Stanley’s chief investment officer believes new investment opportunities are emerging amid the S&P 500’s decline.
On the Morgan Stanley Market Thoughts podcast, Mike Wilson He says The stock market’s recent sector rotation pattern is likely to continue in the coming months and new categories are expected to begin to outperform.
“Consider these corrections in momentum, because they often lead to a change in leadership, and that is the real opportunity.
We have already seen some leadership rotation this year, from precious and base metals to rare earths to energy, and finally to semiconductors. Now I think the market may be ready to expand again, like it did late last year and the first six weeks of this year.
The analyst says three new sectors all exhibit characteristics that tend to lead to future upside, making them achieve greater gains than other groups.
More importantly, our favorite sectors of consumer discretionary goods, transportation, and regional banks are all up more than 10% over the past month, while the S&P 500 is down modestly.
However, sentiment towards these areas remains muted. This is exactly the kind of setup I like: improving fundamentals, improving relative price action, and investors who are still skeptical.
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