Morgan Stanley's Wilson: U.S. Stock Rally May Broaden From Tech to Cyclicals
Alina Collins
Morgan Stanley strategist Michael Wilson sees the US equity rally broadening from mega-cap tech into cyclical sectors as US-Iran tensions ease, flagging consumer discretionary, transports, and regional banks as prime catch-up candidates.
Why does Wilson think market leadership is shifting?
The core case: US-Iran tensions are easing, Strait of Hormuz shipping traffic is recovering, and the drag from rates, oil prices, and the dollar is fading.
This means → the three headwinds that kept cyclicals down — high rates, high oil, strong dollar — are all turning. Undervalued pro-cyclical stocks now have room to lead.
In plain terms = during the conflict, money crowded into tech for safety. As risk recedes, capital flows toward what's cheap.
Which sectors does he favor?
Wilson's team reiterates overweight calls on three underowned cyclical groups: consumer discretionary, transports, and regional banks.
All three have already begun to outperform the S&P 500, yet sentiment and positioning remain "bearish and depressed."
This means → prices have started to move, but most money hasn't followed yet — if the rotation continues, positioning catch-up alone can fuel further gains.
What does the recent pullback signal?
Wilson notes the recent decline, led by memory-chip stocks, stems from slowing earnings momentum — not fundamental deterioration.
This means → it is a typical "digestive pullback" within an earnings-driven bull market, not a trend-reversal signal.
There may still be choppiness in the weeks ahead, but our conviction in the current bull market is unchanged.
Michael Wilson
Chief US equity strategist, Morgan Stanley
(June 15, 2026 research note)
Does JPMorgan agree?
JPMorgan global equity strategist Mislav Matejka echoed the view: as long as geopolitical tensions keep easing and earnings and inflation stay stable, the rotation into cyclicals "can extend through year-end."
This reflects a rare consensus between two major banks on the same directional call — cyclical catch-up is not a short-term trade but a potential theme for the second half.
Content is for reference only, not financial advice.