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Investors could face a correction as the quarterly earnings season kicks off, with stocks trading at all-time highs.\u00a0<\/p>\n
Morgan Stanley\u2019s chief U.S. equity strategist warned uncertainty around a host of different issues\u2014including corporate earnings, the November election outcome, future tariffs and central bank policy\u2014will mean the current third quarter could get \u201cchoppy\u201d for investors.<\/p>\n
\u201cRight here, valuations<\/a> to me look very, very unexciting,\u201d Mike Wilson told Bloomberg TV on Monday. \u201cI think the chance of a 10% correction is highly likely sometime between now and the election.\u201d\u00a0<\/p>\n The Morgan Stanley strategist was quick to point out that apart from a few dozen U.S. corporations, the average company isn\u2019t seeing its profits increase, and it will not until the Federal Reserve begins to loosen.\u00a0<\/p>\n Investors are hoping to glean some helpful hints on the direction of monetary policy when chair Jay Powell provides testimony to Congress today and tomorrow. Currently the market is pricing in an 80% chance of a rate cut<\/a> in September as labor market data softens.\u00a0<\/p>\n \u201cWe need rates to come down, that\u2019s number one,\u201d Wilson told Bloomberg Television. \u201cOr we need some sort of exogenous positive shock on the growth side that doesn\u2019t lead to an inflationary problem. You tell me where that\u2019s coming from.\u201d<\/p>\n Here\u2019s where artificial intelligence, and generative AI in particular, enters the picture. <\/p>\n Whether it\u2019s Apple<\/a>, Meta, or Amazon<\/a>, many companies are notching fresh record highs amid expectations that AI will prove transformational for corporate profits, boosting productivity without pushing up prices. <\/p>\n The question is whether the slate of earnings figures will bear that out when the first begin reporting results later this week, starting with the major Wall Street banks on Friday.<\/p>\n \u201cI am looking at during the second quarter for a lot of companies to give us some specific examples of how AI is starting to make a difference in their productivity and cost cutting,\u201d Yardeni Research president Ed Yardeni\u00a0told<\/a>\u00a0CNBC on Monday.<\/p>\nAI chip supplier Taiwan seeing exports to U.S. soar<\/h2>\n