LIVE MARKETS-Wall Street: a 'tradable rally' is in the air

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WALL STREET: A 'TRADABLE RALLY' IS IN THE AIR

A potential rally is on the cards, according to Morgan Stanley, as the S&P 500 trades at the lower end of its H1 range.

MS strategist Michael Wilson cites improving seasonality, lighter sentiment and positioning along with recent dollar weakness and a decline in rates as factors supporting a rebound.

"A tradable rally is likely," he says.

However, he cautions that growth concerns and volatility are likely to persist, driven by policy uncertainty and sequencing that may dent investor and consumer confidence.

Wilson notes that the recent drop has left the market oversold. He believes that 5,500 .SPX should provide support for a rally, led by cyclicals, lower-quality and expensive growth stocks that have been hit hardest.

Friday's price action appears to support this call, but Wilson says investors should not view a relief rally as a sign that volatility is going away in a sustainable manner.

"Policy uncertainty has only ramped up further recently... Perhaps even more importantly, this administration doesn't appear to be preoccupied with stock prices."

(Danilo Masoni)

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