Morgan Stanley's Wilson: Amid the volatility in the US stock market, defensive stocks should be bought
Morgan Stanley strategist Wilson suggests that investors increase their allocation to defensive industries to cope with the uncertainty of economic data, such as utility stocks and consumer stocks
Against the backdrop of "turbulence in the US stock market" and "uncertainty in the US Federal Reserve's economic outlook," Wilson suggests that investors should adopt a prudent strategy, such as investing in defensive stocks like consumer goods.
A report recently released by the research team led by Michael Wilson under Morgan Stanley pointed out that key economic data in the United States is sending out a mixed message, leading to market volatility. In this context, investors should increase their holdings in defensive stocks such as the consumer goods industry to cope with the uncertainty in economic data.
In the report, Wilson's team wrote:
"The US economy still has the potential to achieve a so-called 'soft landing' or 'no landing' state, even with relatively high interest rates and resilient economic growth. If indicators measuring business activities further slow down, people may even consider increasing their holdings in defensive industries such as utilities and essential consumer goods."
Wilson also mentioned that the upcoming CPI data plays a crucial role in pricing the monetary policy path and market expectations. However, considering the impact of price trends on investor sentiment in an uncertain macro environment, the market's reaction after the data release may be more important than the data itself.
Furthermore, Wei Li, the Global Chief Investment Strategist at BlackRock, stated that the market is in a new macroeconomic system with "high uncertainty in macroeconomics," where cyclical forces and structural forces interact in highly unpredictable ways.
Over the past two weeks, the S&P 500 index has performed well, mainly driven by the market's optimistic expectations that the Federal Reserve may still adopt accommodative policies this year, while robust corporate earnings have also supported market sentiment. As of last Friday's close, the index exceeded 5100 points, about 14% higher than Wilson's 12-month target of 4500 points.
