Morgan Stanley’s chief investment officer Mike Wilson expects a meaningful rotation back into U.S. stocks and sees the beaten-up Mag Seven group as a winner. The firm’s market weakness is primarily tied to earnings revisions, interest rate cuts, immigration enforcement, and government efficiency measures.
Wilson notes that the recent rally was initially driven by a short squeeze but has stabilized, with some revision factors on Mag Seven stocks starting to stabilize. This stabilization, combined with stronger seasonals and lower rates, supports his call for a tradeable rally from around 5,500.
Despite this optimism, Wilson cautions that volatility will persist throughout the year. He also warns of new lows in the year-end target. His S&P 500 year-end target is 6,500, implying a nearly 13% gain.
However, there are concerns about the sustainability of this rally, and Wilson believes it may fade into earnings reports by May or June. He does not rule out a potential new high in the second half of the year as investors look forward to 2026.
Source: https://www.cnbc.com/2025/03/24/big-tech-mag-7-fueling-market-rally-not-tariff-hopes-morgan-stanley.html