Daiwa: US stocks are in the final stage of adjustment, investors should be prepared to increase risk exposure.

Morgan Stanley strategist said that the accelerated corporate profit growth is providing protection for the S&P 500 index, preventing it from experiencing deeper declines, while also masking the broader decline in the US stock market. The team led by Michael Wilson pointed out that the strong profitability performance, coupled with the continued economic recovery, is the reason why the S&P 500 index has fallen by less than 10% since reaching a record high in January. They believe that beneath the surface, the stock market has shown signs of being in the "final stage" of adjustment. They stated that there are better indicators for evaluating the decline in US stocks: the price-earnings ratio of the S&P 500 index has dropped by 18% from its peak in October of last year, while over half of the stocks in the Russell 3000 index have declined by at least 20%.