Morgan Stanley Says Glum Profit View to Dent Economy-Tied Stocks
- Estimate revisions weaken, driven by cyclicals, Wilson says
- Outlook doesn’t support broad rotation into cyclicals, he says
Lower Manhattan, New York
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A dimmer outlook for US corporate earnings is likely to hurt stocks that are tied to the economy, as investors worry about the impact of falling inflation on pricing power, according to Morgan Stanley’s Michael Wilson.
The strategist — who was among the biggest bearish voices on US stocks last year — said that a gauge that measures profit upgrades versus downgrades has turned weaker, as is typical for this time of the year. That’s being driven primarily by so-called cyclical sectors.