In its latest weekly report, Morgan Stanley's chief U.S. equity strategist, Michael Wilson, and his team stated that the U.S. stock market correction that began in June is entering its final stage. The S&P 500 is catching up with the previously weakening market breadth, approaching the bank's downside target range of 7100-7300 points. The bank expects the market to retest last week's lows in the next one to two weeks, even reaching the lower end of the target range, before potentially initiating a year-end rebound. The semiconductor sector may continue to lead the decline in the final stages of the correction. Regarding investment strategy, the bank suggests not waiting for an absolute market bottom, but rather gradually increasing holdings of high-quality cyclical stocks with significantly reduced valuations and strong earnings forecast (EPS) revisions in the coming weeks. Regarding concerns about data center investment stemming from the midterm elections, the bank believes that data center capital expenditure is expected to account for only 5% of the S&P 500's consensus revenue forecast for 2027, and even if some projects are delayed, the impact on the overall revenue and earnings of the index will be relatively limited.
