Stocks have rallied broadly in July, with the Nasdaq bouncing off earlier declines. And Wall Street is debating whether the markets have bottomed yet. Growth stocks, like tech stocks, have slumped across the board this year due to monetary tightening, the recession and other risks. And Morgan Stanley, in a report on August 3, warned that while the Nasdaq has rebounded 16% since June 16, investors should not get ahead of themselves. “This is not a market bottom things are not going to go up steadily from here as we are going to be buying less tech products for a while so everyone has fewer units to make as post-COVID demand = pre- COVID.” bank analysts wrote. “Reality check: Unlike ‘big tech,’ consumer discretionary-related companies are providing more cautious guidance,” they added. Morgan Stanley listed a few examples: Sony disappointed with guidance, Microsoft and Apple slowing down hiring. Microsoft also said small and medium-sized businesses are spending less on IT and warned of a deteriorating PC market in June, the investment bank said. The “outlier,” said Morgan Stanley, is Apple. Consumption in China has also declined, thanks to the effects of the Covid lockdowns, according to Morgan Stanley. That slowdown will affect the e-commerce and consumer discretionary sectors, he said. Why Stocks May Be Rebounding The bank said stocks are now bouncing for a number of reasons: Inflation expectations have subsided due to falling commodity prices and a perceived slowdown in interest rate rises means less pressure on tech stocks. Earnings have been “lackluster, but not as bad as feared,” he added. US stocks mostly continued to rally this week. The Nasdaq is up 2.7% so far, while the S&P 500 hit its highest level since June on Wednesday, rising 0.5% so far this week. But Morgan Stanley did sound a note of caution about what lies ahead. Read more Asset manager predicts the next bull market and reveals how to position yourself for it Here’s how to invest for returns to get through a bad year for stocks and bonds, according to the pros Has the market bottomed? Here’s what Wall Street has to say after the US stock market rally in July: “Earnings aren’t going to go up; the problem isn’t with the current earnings season (that’s hindsight), but we’re on the wrong side of the earnings cycle. and it’s next earnings season and the one after that where we’re going to see writedowns, revenue pressure and mean reversion of margins,” the analysts said. Tech Stock Picks Morgan Stanley said Samsung is a tech stock that can weather” storm.” He says the company has a “tremendous range of resources” that it has yet to monetize, and has seen its valuation drop to a level that is “most significant” since late 2018. Morgan Stanley gave the stock a price target of 70,000 Korean won ($53), about 14% higher The bank said it likes companies that have the ability to consistently grow better than their peers, naming chipmakers TSMC and Alchip as two Morgan Stanley gave TSMC a price target of NT$780, an advantage of about 55% It also gave Alchip a price target of NT$1,420, an advantage of more than 120% Morgan St Anley said it would sell technology parts such as cloud semiconductors and Japanese semiconductor capital equipment.
Morgan Stanley in technology stocks and market fund, Nasdaq