Morgan Stanley said the risk of an economic slowdown now outweighs the risk of inflation. In the middle of the year, the stock market was near all-time highs, driven largely by a handful of large tech stocks tied to the artificial intelligence industry. The S&P 500 has soared nearly 15% this year and set more than 30 closing records. But Morgan Stanley worries that poor market breadth, which measures the number of advancing stocks compared with declining ones, suggests slowing economic growth is becoming a bigger risk than stubbornly high inflation. As evidence, Wall Street investment banks cited downside surprises in recent macroeconomic data. “With broadly weak year-to-date macro data, many lower-quality and economically-sensitive market sectors have lagged, while a handful of higher-quality large-cap sectors have lagged,” Morgan Stanley equity strategist Mike Wilson wrote. “We believe this shows that the market is increasingly focused on weak growth rather than inflation and inflation. [interest] Wilson said. Meanwhile, the Russell 2000 is also trailing 2024 with a gain of just 0.5%. is squeezing out many economic actors. Large-cap and defensive stocks, especially with what he sees as the most likely future economic slowdown, “a growth scare is enough to turn bad economic data into bad news for the stock market.” [price-to-earnings] “We view this as the most likely risk, and our conversations with clients reinforce this view,” Wilson said. Here are some quality large-cap and defensive stocks with strong earnings forecasts that could outperform the market. , which ranks among the top 1,000 stocks by market capitalization and the top third of the Composite Quality Composite Index, according to Morgan Stanley, Burlington shares are up 25% this year and have been given an increase by Morgan Stanley. Hold rating. Purchasing and supply chain processes to improve profitability of existing operations. Stocks with an Overweight rating are down more than 14% this year. Discounts and private label have minimal impact,” Nvidia and HubSpot also appeared on Morgan Stanley’s screens.
