Wall Street starts cautiously: market analyzes and outlook

Wall Street is starting the new week cautiously. 10-year U.S. Treasury yields are trading at 5.27 percent with Brent at about $103. At the same time, recent labor and inflation data show slightly less pressure, and several Fed members are signaling that another rate hike in October is unlikely. The market is currently expecting the next step to take place in December.

What is remarkable is the enormous weakness below the index surface: 54 percent of the Russell 3000 stocks have fallen more than 20 percent since June, while the S&P 500 is already valued significantly more favorably with an expected P/E ratio of around 19. Morgan Stanley therefore sees opportunities in cyclical quality stocks, especially industrial stocks. At the same time, the fundamentals remain strong: 27 percent profit growth and ten percent sales growth are expected for the S&P 500 in the third quarter. According to the recently increased estimates, the bar is correspondingly high. The AI ​​boom remains the most important pillar. Foxconn reports 47 percent revenue growth in the third quarter, another signal of robust investment in AI infrastructure. However, the Middle East conflict remains stressful: Iran does not want to fully reopen the Strait of Hormuz for the time being.