Morgan Stanley Chief Investment Officer Mike Wilson delivered a strikingly bullish outlook for the U.S. equity market this week, predicting high teens earnings growth and placing his bets on the consumer goods sector.
Speaking on CNBC’s Squawk Box, Wilson characterized the path forward as “crystal clear,” driven by a stabilizing Federal Reserve and legislative tailwinds that are set to reignite the consumer sector.
Wilson identified consumer goods as his top conviction pick for the year, arguing the sector is primed for a rebound after enduring a “rolling recession.”
Don’t Miss:
He cited a convergence of favorable factors—specifically falling interest rates and fiscal stimulus—that will unlock pent-up demand.
“That’s an area where it’s going to get a big boost from the ‘Big Beautiful Bill’ from the tax cuts in the first half of this year,” Wilson said.
He noted that the combination of these policy measures and the “attack on affordability” creates a robust environment for consumer stocks, which have yet to fully price in the recovery. Here’s how consumer goods index and certain ETFs tracking the sector have performed.
|
Index / ETFs |
6-Month Performance |
YTD Performance |
One-Year Performance |
|
Dow Jones U.S. Consumer Goods Index |
9.62% |
-1.40% |
6.42% |
|
ProShares Ultra Consumer Staples (NYSE:UGE) |
-8.27% |
1.68% |
-0.35% |
|
iShares US Consumer Staples ETF (NYSE:IYK) |
-4.97% |
-0.43% |
5.25% |
Trending: This Real Estate Fund Pays 10x More Than the Average Savings Account – Invest From Just $100
Contrary to fears of a slowdown, Wilson argues the market’s earnings picture is strengthening. “The earnings picture is crystal clear to us,” he stated, forecasting earnings growth in the “high teens” as the rally broadens beyond the tech sector.
A key pillar of this optimism is a shift in Federal Reserve policy. Wilson highlighted that the Fed has begun purchasing assets again to stabilize funding markets—a move he described as a “wild card” that has now been resolved in favor of the bulls.
“The Fed now is addressing these liquidity concerns… proactively,” Wilson noted, adding that this support removes a significant layer of risk for investors.
While the long-term outlook remains positive, Wilson cautioned that corrections are inevitable in a midterm election year.
