Morgan Stanley strategist Michael Wilson said U.S. stocks beyond technology giants are poised for strong second-quarter earnings that could broaden the equity rally.
This shift is significant because the recent market growth has been heavily concentrated in a few tech companies. A rotation into cyclical and economically sensitive industries suggests a more sustainable, wide-based recovery across the broader economy.
Wilson's outlook comes ahead of the second-quarter 2026 earnings season. He said that firms within the S&P 500 are set for a 23% profit jump [1]. This growth is expected to extend across various sectors, moving the momentum away from the dominant technology sector and toward a more diverse set of corporate winners.
According to Wilson, the breadth of this recovery is evident in the S&P 1500 Composite index. He said that the median constituent of that index is expected to deliver earnings-per-share growth of more than 10% [2]. This trend indicates that profitability is returning to a wider array of companies, regardless of their size or sector.
The strategist suggests that this broadening is driven by a rotation into industries that are more sensitive to economic cycles. As these companies report their results, the market may see a shift in investor preference toward those showing fundamental growth in profit and earnings per share.
Wilson said these projections point to a healthier market environment where gains are not limited to the largest tech firms. The anticipated double-digit growth for a majority of the S&P 1500 constituents provides a foundation for a rally that includes a larger portion of the U.S. equity market.
“S&P 500 firms are set for a 23% profit jump”
The transition from a tech-led rally to a broader market gain typically signals a shift in investor confidence from speculative growth to fundamental economic health. If non-tech companies deliver on these profit projections, it could reduce the market's vulnerability to a downturn in any single sector and confirm a wider economic recovery.
