According to Jin10, Morgan Stanley strategists said U.S. stock valuations have fallen sharply since early summer, and the appeal of some market sectors is rising as earnings growth remains strong. Michael Wilson's team said the pullback has created a better investment environment for industries tied to the economic cycle and with still-solid fundamental prospects. Capital goods stood out, with earnings estimate upgrades ranking among the highest across sectors. Wilson said in a Monday report that some asset-heavy sectors are starting to look more attractive after recent valuation cuts. U.S. stocks have slowed since mid-August, as rising bond yields offset the boost from a strong earnings season. Companies will begin reporting third-quarter results in the coming weeks, and the market expects earnings to remain strong. Bloomberg Intelligence data showed analysts expect S&P 500 constituents' third-quarter earnings to rise 25% year over year, after second-quarter earnings increased 34%. Earnings growth has been driven by AI demand, record capital spending by cloud giants, and a strong macroeconomic environment.