“Buy the dip,” says Morgan Stanley

Friday’s decline, but another opportunity?

That is what Morgan Stanley is arguing at least as they remain bullish on equities in the coming year. In a note following the US jobs report on Friday, the firm says that:

“We’re buyers of pullbacks and bullish the next 12 months. We think the Fed will eventually transition to cuts. Friday may be all we get to the downside for now; that is, until the next payroll number or other weaker, lagging growth data is potentially revealed.”

This point of view was also reaffirmed by Morgan Stanley’s CIO, Mike Wilson:

“I’m hoping we get a pullback to some degree. A lot of clients are looking for a pullback of some kind.”

Before adding that any pullbacks or corrections are likely to be “short and shallow”, which will offer up dip buying opportunities. Wilson goes on to argue that:

“This is what the beginning of a new bull market looks like. It’s just explosive – it doesn’t let people in. The rate of change is accelerating beyond what you expected. The earnings revision breadth is explosive. You can’t deny the fact that companies are good are mitigating tariffs.”

Those words are holding up well at least for the time being as we get things going in the new week. S&P 500 futures are now up 0.6% on the day, with Nasdaq futures up 0.8% in looking to cover back a decent chunk of the losses from Friday.