MORGAN STANLEY strategists say easing U.S.-Iran tensions could trigger a
rotation into cyclical, economically sensitive sectors that underperformed
during the Iran conflict. The team led by Michael Wilson points to increased
Strait of Hormuz traffic and signs that the drag from rates, oil and the dollar
on equities is easing, which could push undervalued stocks into market
leadership after a rally concentrated in high-growth tech. The S&P 500 sits
about 2% below its record high. Wilson says the recent pullback was driven by
memory-chip stocks on slowing earnings momentum rather than weakening
fundamentals; such retracements are common in profit-driven bull markets after
strong advances. Volatility may persist in the coming weeks, but confidence in
the current bull market remains intact.
