Morgan Stanley’s Mike Wilson Sees ‘Crystal Clear’ Profit Growth, Says ‘Big, Beautiful Bill’ Will Fuel Rally in Consumer Stocks

Chief Investment Officer of Morgan Stanley Mike Wilson delivered a surprisingly bullish outlook for the U.S. stock market this week, forecasting high-teens profit growth and placing its bets on the consumer goods sector.

Speaking on CNBC’s Squawk Box, Wilson called the path forward “crystal clear,” driven by a stabilizing Federal Reserve and legislative tailwinds expected to revive the consumer sector.

Wilson identified consumer goods as his top conviction pick for the year, saying the sector is poised for a rebound after enduring a “continuing recession.”

Don’t miss:

He cited a confluence of favorable factors – particularly lower interest rates and fiscal stimulus – that will unlock pent-up demand.

“This is an area where the ‘Big Beautiful Bill’ is going to get a big boost from the tax cuts in the first half of this year,” Wilson said.

He noted that the combination of these policy measures and the “attack on affordability” creates a strong environment for consumer stocks, which have yet to fully embrace the recovery. Here’s how the consumer goods index and some ETFs that track the sector are performing.

Trending: This real estate fund earns 10 times more than the average savings account – Invest from just $100

Contrary to fears of a slowdown, Wilson says the market’s earnings picture is strengthening. “The earnings picture is very clear to us,” he said, forecasting earnings growth around “10%” as the recovery extends beyond the technology sector.

A key pillar of this optimism is a change in Federal Reserve policy. Wilson pointed out that the Fed has started buying assets again to stabilize funding markets – a move he called a “wild card” that has now been resolved in favor of the bulls.

“The Fed is now responding to these liquidity concerns…proactively,” Wilson noted, adding that this support removes a significant layer of risk for investors.

Although the long-term outlook remains positive, Wilson cautioned that corrections are inevitable in a midterm election year.

He advised investors to expect at least a 10% pullback, but urged them to view those declines as buying opportunities rather than exit signals.

“If we don’t get a 10% correction, that would be unusual,” Wilson admitted. However, he dismissed concerns about an AI bubble or credit collapse, stressing that it is “too early” in the financial cycle for such risks to materialize.

Instead, he envisions a year where “growth is good” and government policy remains supportive, providing a safety net for risky assets.

See also: GM-backed EnergyX solves lithium supply crisis – invest before ramping up global production

Year-to-date, benchmark indices are trading mixed so far in the new year. The S&P 500 index is up 0.63% since the start of the year, the Dow Jones 2.41%. In contrast, the Nasdaq 100 was down 0.07%.

THE SPDR S&P 500 ETF Trust (NYSE: SPY) and Invesco QQQ Trust ETF (NASDAQ: QQQ), which track the S&P 500 Index and Nasdaq 100 Index, respectively, closed lower on Thursday. SPY fell 0.01% to $689.51, while QQQ fell 0.60% to $620.47, according to data from Benzinga Pro.

Futures on the Dow Jones, S&P 500 and Nasdaq 100 indexes were higher on Friday.

Read next: An EA co-founder is shaping this venture-backed market: Now you can invest in the next big gaming platform before the raise ends on January 19.

Image via Shutterstock

Next: Transform your trading with Benzinga Edge’s unique trading ideas and tools. Click now to access unique information that can give you a leg up in today’s competitive market.

Get the latest stock analysis from Benzinga:

This article Morgan Stanley’s Mike Wilson Sees ‘Crystal Clear’ Profit Growth, Says ‘Big, Beautiful Bill’ Will Fuel Rally in Consumer Stocks, originally published on Benzinga.com