A new report from Morgan Stanley confirmed investor suspicions that the U.S. market rally is due to widen this year.

“We analyze 6 different breadth measures across S&P 500 sectors and for the overall index by looking at their percent ranks this cycle (since the Covid lows),” wrote strategist Michael Wilson. “Bottom line, breadth has improved over the past month — an average of the percent ranks across these 6 measures for the overall S&P is now 70%, up from 55% a month ago.”

Wilson went on to note that the industrials sector currently exhibits the strongest breadth profile versus one month ago. On the other hand, energy, materials, real estate and utilities have exhibited the greatest breadth improvement in the last month.

“The recent broadening within large cap leadership may be how the market is dealing with the inconsistency of higher rates and still elevated multiples for the large cap equity indices,” the strategist added.

— Lisa Kailai Han

Investors should disregard concerns over high valuations and focus on growth in what is now a “stockpicker’s market,” according to Matt Orton, chief market strategist at Raymond James Investment Management.

Orton suggested the recent diverging fortunes of the so-called “Magnificent 7” megacap tech stocks, which have powered much of Wall Street’s upward momentum over the last 18 months, was evidence that “we’re back to a stockpicker’s market” where “fundamentals matter once again.”

Much has been made of the high valuations of U.S. stocks. Nvidia trades at around 35 times forward earnings, according to FactSet data, and the broader Magnificent 7 trades at an average of around 34 times forward earnings. The S&P 500, meanwhile, is at a historically high average of 21 times forward earnings.

Tet Orton argued that historical comparisons are irrelevant in a much “growthier” market, and that paying a higher multiple is “perfectly fair” in this changed environment.

“It’s all about earnings growth and it’s all about leaning into where those fundamentals are, and trying to avoid the parts of the market where you don’t have a positive inflection in earnings,” Orton said.

“And if you do that, no matter what the valuation is, you can grow into it, and I think that’s the main message for investors, is ‘find growth.'”

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— Elliot Smith

Alphabet shares rallied 4% before the bell following a report from Bloomberg that Apple is reportedly in talks with the search giant to license its Gemini AI model to power features in the iPhone.

The report, citing people familiar with the matter, said that both companies have held “active negotiations” for Gemini to run some features slated to rollout with new iPhone software later this year. Bloomberg also reported that Apple has held talks with OpenAI.

Apple shares were last up about 0.3%.

Goldman Sachs said monthly inflows into India’s domestic equity funds rose to a 23-month high of $3.2 billion in February, based off data from the Association of Mutual Funds in India.

Inflows into equity funds through systematic investment plans or SIPs remained strong, GS said as it hit fresh highs of $2.3 billion.

India also saw foreign inflows of $2.2 billion in the week ending March 15, according to GS.

The country’s Nifty 50 index dipped 0.3% on Monday after falling over 2% last week.

— Shreyashi Sanyal

China reported stronger-than-expected numbers for retail and fixed asset investment for the first two months of 2024.

Retail sales rose 5.5% and industrial production was up 7%, both beating analysts’ expectations. The unemployment rate for cities was 5.3% in February.

Investment into real estate dropped 9% year on year in January and February, while manufacturing rose 9.4% during that time.

China’s data for January and February is typically combined to smooth out variations from the Lunar New Year, the country’s biggest national holiday, during which businesses remain shut for at least one week.

— Evelyn Cheng

Japan’s Nikkei 225 rose more than 2% on Monday, crossing the 39,000 mark for the first time in 10 days as manufacturing and health-care stocks powered the rally.

However, the largest gainer on the index was financial technology company Rakuten Group, which surged 7.38%.

Other names on the top gainers list include automaker Nissan which climbed over 6.5% , as well as pharmaceutical firm Chugai Pharmaceutical, which was up 4%.

The yen weakened by 0.18% on the back of the index’s rally, trading at 149.29 against the greenback.

Federal Reserve Chair could offer less clarity during the central bank’s policy meeting beginning on Tuesday, according to EY chief economist Gregory Daco.

“We look for Fed Chair Powell to be less transparent than he was in January regarding the May and June meetings being ‘live’ for potential rate cuts,” Daco said in a Friday note. “However, we do anticipate he will stress that Fed policymakers have started discussing policy easing as well as the timing and logistics of tapering the balance sheet quantitative tightening process.”

— Brian Evans

Stock futures were little changed on Sunday, as Wall Street waits for insight on interest rate cuts ahead of the Federal Reserve’s policy meeting this week.

Dow Jones Industrial Average futures slipped 20 points, or 0.05%, while Nasdaq-100 futures ticked up 0.1%. Futures tied to the S&P 500 hovered near the flatline

— Brian Evans