MW Why Morgan Stanley says U.S. outperformance will continue, even if normalcy returns

By Steve Goldstein

U.S. stocks have outperformed international rivals since the Iran conflict began.

The chief stock-market strategist of Morgan Stanley said Monday that the outperformance of U.S. stocks over international rivals that has started since the attack on Iran began will continue even after oil prices move off their highs.

The S&P 500 SPX fell by 2% last week while the iShares MSCI all-country world ex-U.S. ETF ACWX fell 7% as oil prices (CL.1) jumped.

That international underperformance looked likely to continue Monday, as S&P 500 futures (ES00) retreated 1.4%, while the Nikkei 225 JP:NIK slumped 5.2% in Tokyo and the Stoxx Europe 600 XX:SXXP opened lower, falling over 2%.

Morgan Stanley's Mike Wilson told clients that he expects that U.S. outperformance could continue.

He said the U.S. market has been working through a rolling recession for months. "Indices have traded sideways, but dispersion has been historically high under the surface," he notes.

The last phase of corrections is typically a consolidation in the more crowded areas of the market, which he started to see last week.

Now, cyclical sectors and quality growth sectors are less demanding from a positioning and valuation perspective, but still have fundamental tailwinds. That's as the earnings growth for the median stock is the best in four years, and mega-cap tech forward revenue growth expectations continue to accelerate.

Wilson did concede that the oil-price shock has led to a safe-haven rise for the U.S. dollar DXY, which in turn could weigh on earnings if the gains continue

-Steve Goldstein

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March 09, 2026 05:11 ET (09:11 GMT)

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