Morgan Stanley’s (MS) Mike Wilson Remains Bullish On U.S. Stocks

Morgan Stanley’s (MS) top equities strategist remains bullish on U.S. stocks despite recent volatility and underperformance.

Mike Wilson, Chief U.S. Equity Strategist and Chief Investment Officer at Morgan Stanley, says a weaker dollar will improve the earnings of U.S. companies and is likely to lead to American stocks again outperforming their international peers.

The bullish note comes as the benchmark S&P 500 index fell into a technical correction earlier in March, declining more than 10% from its recent highs. While U.S. markets have staged a modest recovery over the past week, they continue to lag European markets.

The S&P 500 index in the U.S. is currently down about 3% this year versus a gain of more than 8% for the pan-European Stoxx 600 index.

Magnificent 7

In a note to clients, Wilson urges investors not to bet against U.S. equities, saying they could quickly bounce back in the “near-to-intermediate term.” Morgan Stanley’s outlook is one of the most positive on Wall Street. A recent Bank of America (BAC) survey found that investors have slashed their holdings of U.S. stocks by the most on record while piling into European equities instead.

However, Wilson says there are already signs of a shift in this trend, and a potential bottom in U.S. stocks. He stresses that a recovery in the so-called “Magnificent 7” mega-cap technology stocks should help revive the rally in U.S. equities. “If this group regains relative strength we could see a rotation back to the U.S.,” writes Wilson, referring to the Magnificent 7.

Bloomberg’s Magnificent 7 Index has declined 14% year-to-date amid worries about valuations and the sustainability of high spending on artificial intelligence (AI). Morgan Stanley recommends that investors hold high-quality stocks to benefit from an improvement in the intermediate-term outlook for U.S. equities. MS stock has declined 8% over the past month amid a downturn in the U.S. market.

Is MS Stock a Buy?

The stock of Morgan Stanley has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on five Buy and 10 Hold recommendations issued in the last three months. The average MS price target of $142.60 implies 15.97% upside from current levels.

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