Stocks rose broadly in July, with the Nasdaq recovering from earlier declines. And Wall Street is debating whether markets have bottomed yet. Growth stocks such as technology have fallen broadly this year on the back of monetary tightening, recession and other risks. And Morgan Stanley in August. 3 report warns that while the Nasdaq has gained 16% since June 16, investors shouldn’t get ahead of themselves. “This isn’t a market bottom, things won’t go up consistently from here as we’ll be buying less tech for a while, so everyone has less units to make than post-Covid = pre-Covid,” the bank’s analysts wrote. “Reality check – unlike ‘big tech,’ consumer discretionary companies provide more cautious guidance,” they said. Morgan Stanley listed a few examples: Sony disappointed with management, Microsoft and Apple slowing hiring. Microsoft also said small and medium-sized businesses were spending less on IT and warned that the PC market would deteriorate in June, the investment bank noted. Morgan Stanley said the “outsider” is Apple. According to Morgan Stanley, consumption in China has also fallen due to the impact of the Covid lockdowns. This slowdown will hit the e-commerce and consumer discretionary sectors, he said. Why do stocks jump? The bank said stocks are now bouncing for several reasons – inflation expectations have eased due to lower commodity prices and a perceived slowdown in interest rate hikes means less pressure on tech stocks. Earnings were “insufficient, but not as bad as feared,” he said. US stocks have largely continued their rally this week. The Nasdaq is up 2.7% so far, while the S&P 500 rose 0.5% for the week on Wednesday, hitting its highest level since June. But Morgan Stanley sounded a note of caution about what lies ahead. Read more An asset manager predicts the next bull market and explains how to position for it Here’s how to invest for yield to beat a bad year for stocks and bonds — according to the pros Has the market bottomed? Here’s what Wall Street had to say after the US stock market rebounded in July: “Earnings won’t go any further – it’s not about the current earnings season (that’s backwards), but we’re on the wrong side of the earnings cycle. and it’s next earnings season and beyond where we’re going to see correspondence, top line pressure and margin mean reversion,” the analysts said. Morgan Stanley said Samsung was one of the technology stocks that could weather the “storm.” He said the firm’s notes that it has a “huge range of resources” that it has yet to monetize, and that its valuation has fallen to the “most significant” level since late 2018. Morgan Stanley has set a 70,000 Korean won ($53) price target on the stock, about 14% upside. The bank, sequentially, said it likes companies with better growth potential than its peers, citing chip makers TSMC and Alchip as two such examples. Morgan Stanley gave TSMC a price target of NT$780, an upside of about 55%. It also gave Alchip- gave a more than 120% upside price target of NT$1,420.Morgan Stanley, Cloud Semiconductor and Japanese Semiconductor Capital Equipment said that he will sell technology parts.
Morgan Stanley, market bottoms and tech stocks, Nasdaq
