Morgan Stanley strategists led by Michael Wilson say a sharp valuation reset in
U.S. equities since early summer has created buying opportunities in
economically sensitive sectors with intact fundamentals. The team highlighted
capital goods as especially attractive, with the largest upward revisions to
profit forecasts. The U.S. rally has cooled since mid-August as rising bond
yields have offset gains from a strong earnings season. Companies start
reporting Q3 results in the coming weeks; Bloomberg Intelligence shows analysts
expect S&P 500 Q3 earnings +25% YoY after a +34% rise in Q2. Earnings momentum
is being driven by AI demand, record cloud capex from major cloud providers and
a resilient macro backdrop.
