Morgan Stanley: Confidence in the current bull market intact, US stock gains will spread to cyclical industries

Morgan Stanley strategists say that US stocks will receive a boost from capital rotation to cyclical and economically sensitive industries, which have underperformed during the Iran War. Strategists point out that reports of increased traffic in the Strait of Hormuz, as well as signs of easing drag from interest rates, oil prices, and the US dollar on the stock market, are expected to drive undervalued stocks higher. The S&P 500 index is only about 2% away from its historical high. Strategists say that the recent pullback in the US stock market has been led by storage chip stocks, due to a slowdown in profit momentum. In a bull market driven by profit growth, a pullback after a strong uptrend is a common phenomenon, and Morgan Stanley's confidence in the current bull market remains intact.