BlockBeats News, July 21st, Morgan Stanley's strategy team led by Mike Wilson said that after a 20% correction in the semiconductor industry, the broader industry sectors may drive the market higher. "On the contrary, we believe that the market diffusion trend will continue. Once this correction is over, the broader industry sectors will propel the market to further gains before the end of the year." Morgan Stanley believes that the non-essential consumer goods and transportation sectors may benefit as profit improvement expectations in these areas have not been fully reflected in stock prices.

Morgan Stanley believes that the non-essential consumer goods and transportation sectors may benefit as profit improvement expectations in these areas have not been fully reflected in stock prices. The institution is more inclined towards mega-cap cloud computing companies in the coming months rather than chip companies. However, Wilson's team pointed out that as cloud computing companies have risen by about 30% compared to chip stocks in the past three weeks, the current risk-reward ratio has decreased. Morgan Stanley remains bullish on large tech companies, believing that their strengths include stable core businesses, the potential for AI development, and improving profit capabilities.

The institution continues to maintain its year-end target of 8000 points for the S&P 500 index, but warns that if momentum trading reverses its diffusion, or if the Middle East conflict escalates further, the index could fall to around 7000 points.