Morgan Stanley: Semiconductor Pullback Not Yet Ended, Capital Flowing to Consumer and Transportation

According to TechFlow Research, Morgan Stanley released a weekly US stock strategy report on July 20. The report pointed out that the trend of market breadth expansion continues, and the momentum trading risks in the semiconductor sector have not yet been fully released. The silver stock price analogy model shows that semiconductors may have about 15% downside potential in the short term, and earnings revision breadth has retreated from historical extremes. Over the past two months, the consumer durables and transportation sectors outperformed the S&P 500 by approximately 12 percentage points respectively, and the equal-weight index continues to outperform the market-cap weighted index. In terms of allocation, Morgan Stanley continues to recommend overweighting cloud providers (Microsoft, Google, Meta, Amazon) and underweighting semiconductors within the technology sector. The equal-weighted P/E ratio of the four major giants has fallen back to 21 times. Consumer durables and transportation are the clearest directions for capital inflows, with the earnings revision breadth of the transportation sector reaching the strongest level since 2021. Market style is gradually shifting towards quality factors, with earnings revision breadth for high gross margin and high sales stability factors continuing to strengthen. The S&P 500 year-end target is 8,000 points, with 7,000 points being a key technical support level.