Stocks generally rallied in July, with the Nasdaq bouncing off previous declines. And Wall Street is debating whether markets have bottomed yet. Growth stocks like tech have fallen sharply this year on the back of monetary tightening, recessions and other risks. And Morgan Stanley in an 8.3 report warned that while the Nasdaq is up 16% since June 16, investors should not rush. “This is not a market bottom, things will not consistently go up from here as we will be buying less technical products for a while so everyone will have to make fewer units as demand is post COVID = pre COVID,” the analysts wrote the bank. “Reality check – unlike ‘Big Tech’, the consumer products-related companies are giving more cautious guidance,” they added. Morgan Stanley listed a few examples: Sony disappointed with forecast, Microsoft and Apple slowing down hiring. Microsoft also said that small and medium-sized businesses are spending less on IT and warned of a deteriorating PC market in June, the investment bank noted. The “outlier,” Morgan Stanley said, is Apple. According to Morgan Stanley, consumption in China has also fallen thanks to the effects of Covid lockdowns. That sluggishness will hit the e-commerce and consumer discretionary sectors, he said. Why Stocks May Rise The bank said stocks are now bouncing for a number of reasons — inflation expectations have eased on falling commodity prices, and a perceived slowdown in rate hikes means less pressure on tech stocks. Gains are “weak but not as bad as feared,” he added. US stocks continued to rally for much of this week. The Nasdaq is up 2.7% so far, while the S&P 500 hit its highest level since June on Wednesday and is up 0.5% on the week-to-date. But Morgan Stanley warned of what lies ahead. Read more Money manager predicts the next bull market – and how to position yourself for it How to invest in yield to beat a bad year for stocks and bonds – according to the pros Has the market bottomed? Here’s what Wall Street had to say after the US stock market rebounded in July: “Earnings won’t go up – the issue isn’t with the current earnings season (that’s a recap) but we’re on the wrong side of it Earning cycle and it’s the next earnings season and beyond where we’re going to see writedowns, top line pressure and margin reversals,” the analysts said. Tech stock picks Morgan Stanley said Samsung is a tech stock that will “weather the storm.” It said the company has a “tremendous range of assets” that it has yet to monetize, and its valuation has fallen to an “highest” level since late 2018. Morgan Stanley gave the stock a price target of 70,000 Korean won ($53), about 14% upside The bank said it likes companies capable of consistently growing better than its peers, calling chipmakers TSMC and Alchip a ls two such examples. Morgan Stanley gave TSMC a price target of 780 Taiwanese dollars, up about 55%. It also gave Alchip a target price of 1,420 Taiwanese dollars, up more than 120%. Morgan Stanley said it would sell pieces of technology such as cloud semiconductors and Japanese semiconductor capital equipment.