Bitcoin price today: surges to $122k, near record high on US regulatory cheer
Investing.com -- U.S. stocks could face some short-term turbulence in the third quarter, but any pullbacks may present a buying opportunity, according to Morgan Stanley’s top equity strategist, Michael Wilson.
“While there should be some consolidation during 3Q, we think dips are meant to be bought,” Wilson wrote in a Monday note.
Morgan Stanley (NYSE:MS) maintains a bullish outlook for the next 12 months, leaning toward its S&P 500 bull case of 7200 by mid-2026. Strong earnings momentum, positive operating leverage, and underappreciated tax savings are seen as key drivers of upside.
“EPS revisions breadth continues to accelerate higher, helping to confirm our constructive view on the earnings backdrop,” Wilson said, adding that the trend is being led by large caps.
While constructive overall, Morgan Stanley outlined several near-term risks. The 10-year Treasury yield recently tested 4.5%, a level that historically increases rate sensitivity for equities.
“A break above this level could lead to underperformance of lower quality, rate-sensitive areas,” such as small caps and higher-leverage stocks, Wilson noted.
He also flagged the potential for higher tariff-related input costs to start flowing through to company income statements, which could pressure margins or fuel renewed inflation concerns.
Additionally, Wilson pointed to seasonal weakness. “Seasonals tend to soften in the second half of July into August based on ~100 years of history.”
Still, the strategist sees these risks as “temporary and only likely to lead to modest consolidation in price.”
“We’re buyers of dips,” he added.
In terms of positioning, the bank continues to prefer large caps over small caps, citing superior earnings revisions.
Industrials remain the top sector pick, with Financials and Software (ETR:SOWGn) also favored due to earnings trends and limited tariff exposure.
Consumer Goods is the only sector flagged as underweight given its sensitivity to pricing power and trade costs.
Morgan Stanley also reiterated its preference for U.S. equities over international peers, supported by a weaker dollar and relatively stronger earnings revisions.