Morgan Stanley is optimistic about the U.S. stock market, with tax reform and earnings expectations boosting investment confidence.

[Coin World] Morgan Stanley strategists indicate that large U.S. stocks are attractive as they are expected to benefit from the fiscal spending bill and strong earnings prospects. The team stated that the tax reform bill is likely to improve cash flow, thereby supporting the investment logic in zones such as technology, communication services, healthcare, and energy. Additionally, the breadth of earnings expectation revisions has significantly improved—the number of analysts raising earnings expectations minus the number of analysts lowering expectations—boosting investor sentiment amid ongoing trade uncertainties. The team reiterated its preference for the financial and industrial zones, noting that recent earnings expectation revisions in these zones have been substantial. "The new tax reform bill is beneficial for large-cap indices, and strong earnings per share revisions are as well," the report stated.