Stocks largely rallied in July, with the Nasdaq rebounding from previous declines. And Wall Street wonders if the markets have already bottomed out. Growth stocks such as technology have largely slumped this year due to monetary tightening, recession and other risks. And Morgan Stanley, in an Aug. 3 report, warned that while the Nasdaq has rebounded 16% since June 16, investors shouldn’t take the lead. “It’s not a market bottom, things aren’t going to rise steadily from here because we’re going to be buying fewer tech products for a while, so everyone has fewer units to make because post-COVID demand = pre-COVID,” the bank’s analysts wrote. “Reality check – unlike ‘big tech,’ consumer discretionary companies give more cautious advice,” they added. Morgan Stanley listed a few examples: Sony disappointed with advice, Microsoft and Apple are slowing down hiring. Microsoft, moreover, said small and medium-sized businesses were spending less on IT and warned of a deterioration in the PC market in June, the investment bank noted. The “outlier,” Morgan Stanley said, is Apple. Consumption in China is also down, thanks to the effects of Covid lockdowns, according to Morgan Stanley. This slowness will hit the e-commerce and consumer discretionary sectors, he said. Why can stocks rebound? Revenues were “dull, but not as bad as feared”, he added. US stocks have mostly continued their rally this week. The Nasdaq is up 2.7% so far, while the S&P 500 hit its highest level since June on Wednesday, up 0.5% so far on the week. But Morgan Stanley has issued a note of caution on what lies ahead. Read more Asset manager predicts the next bull market—and reveals how to position yourself for it Here’s how to invest to beat a bad year for stocks and bonds—according to the pros Has the market touched the bottom ? Here’s what Wall Street has to say after the U.S. stock market rebounded in July “Earnings aren’t going to rise – the problem isn’t about the current earnings season (it’s looking back) but we’re on the wrong side of the earnings cycle and this is the next earnings season and the one after that where we will see writedowns, top line pressure and average margin reversal,” the analysts said. Tech stock picks Morgan Stanley said Samsung is a tech stock that can weather “the storm.” It says the company has a “huge range of resources” that it has yet to monetize and has seen its valuation drop by “the biggest” level since late 2018. Morgan Stanley gave the share price target of 70,000 Korean won ($53), around a 14% upside. The bank said it likes companies that have the ability to consistently grow better than their peers, citing chipmakers TSMC and Alchip as two examples. Morgan Stanley gave TSMC a price target of 780 Taiwan dollars, up about 55%. He also gave Alchip a price target of 1,420 Taiwan dollars, up more than 120%. Morgan Stanley said it would sell parts of the technology such as cloud semiconductors and Japanese semiconductor investment equipment.