Morgan Stanley chief strategist Michael Wilson, a well-known Wall Street bear, said in a new research note that the market narrative in U.S. equities is shifting as earnings growth spreads beyond major technology names to a broader set of stocks. According to Wilson and his team, the median constituent in the S&P 1500 Composite has now posted earnings-per-share growth above 10%, a sign that profit momentum is no longer concentrated in a small group of mega-cap companies. He said the broader advance has been driven mainly by the earnings resilience of midstream businesses. Wilson also pointed to a notable change in market performance: the equal-weighted S&P 500 has started to outperform the market-cap-weighted version for the first time since 2022. In his view, that shows traditional sectors tied more closely to macroeconomic growth are showing stronger defensive qualities and better growth potential even as large technology companies continue to perform well.
Earnings growth is spreading beyond major technology stocks
On July 13, BlockBeats reported that Morgan Stanley chief strategist Michael Wilson and his team said in their latest research note that the logic driving the U.S. stock market is undergoing a major shift. In their view, the baton of earnings growth is moving from technology giants to a much broader group of constituents.
The note said the median constituent in the S&P 1500 Composite has seen earnings-per-share growth rise above 10%. Wilson said this broad-based advance has been driven mainly by the earnings resilience of midstream companies.
Equal-weight S&P 500 starts to outperform
Wilson also said the equal-weighted S&P 500 has begun to outperform the market-cap-weighted index for the first time since 2022. That suggests that while large technology companies are still performing strongly, traditional sectors that are more closely tied to macroeconomic growth are showing stronger defensive characteristics and more growth momentum.
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