Morgan Stanley strategists indicated that the recent wave of rolling corrections is closer to its conclusion than its beginning, and they continue to hold a constructive view on US equities for the next 6 to 12 months.

A team led by Mike Wilson stated in a report that the outlook for US stocks remains favorable, benefiting from a reacceleration in corporate earnings growth and ongoing expansion.

However, near-term market volatility is likely to persist, influenced by fluctuations in oil prices and a strengthening US dollar.

US equities have outperformed overseas markets, aided by the country's modest energy surplus. The strategists anticipate this trend is likely to continue, even under an optimistic scenario where crude oil prices decline.

They wrote, "Our base case remains that any further near-term weakness will present an opportunity to add to cyclical trades."

From the perspective of positioning and valuations, cyclical sectors are not currently overextended, and fundamental tailwinds remain intact.

Within the cyclical sectors, the team expresses a preference for financials, industrials, consumer discretionary, and small-cap stocks.

For defensive hedging, the team favors healthcare and high-quality stocks.