What did we learn last week? Some big banks are holding up okay after last month’s tremors, thanks to rising rates. That, along with cooling inflation, helped the Dow industrials
DJIA,
-0.42%
close out its longest weekly winning streak since October. Will optimism hold as earnings season gets fully under way this week and is banking stress done? Our call of the day, from Morgan Stanley’s chief U.S. equity strategist Mike Wilson, warns of a long shadow cast by March stress, despite a mostly upbeat stock market.
“In contrast to what we expected, the S&P 500
SPX,
-0.21%
and Nasdaq
COMP,
-0.35%
have traded well since SVB [Silicon Valley Bank] first announced it was insolvent. However, small-caps, banks and other highly levered stocks have traded poorly as the market leadership turned more defensive, in line with our sector and style recommendations,” Wilson tells clients in a new note.
The strategist credits “defensive/high-quality characteristics and lower back-end rates” for holding up bigger indexes, but warns against breathing easy here. “On the contrary, the gradual deterioration in the growth outlook continues, which means even these large-cap indexes are at risk of a sudden fall like those we have witnessed in the regional banking index and smal …
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The strategist credits “defensive/high-quality characteristics and lower back-end rates” for holding up bigger indexes, but warns against breathing easy here. “On the contrary, the gradual deterioration in the growth outlook continues, which means even these large-cap indexes are at risk of a sudden fall like those we have witnessed in the regional banking index and smal …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]