Amazon.com to take top spot in beauty market by 2025 - MS

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AMAZON.COM TO TAKE TOP SPOT IN BEAUTY MARKET BY 2025 - MS (0927 EDT/1327 GMT)

Amazon.com Inc will overtake Walmart as the top player in the beauty market by 2025, Morgan Stanley says, as e-commerce trends outpace brick-and-mortar growth in the segment.

Analysts at MS led by Simeon Gutman forecast Amazon to take the lead in the beauty segment by 2025, representing 14.5% of the market that could reach $180 billion by 2025. They expect Walmart to hold 13% share.

The bank projects the beauty market to grow at pre-pandemic level of 3% growth rate by 2025 after averaging about 4% this year.

Within e-commerce, Amazon could represent 46.5% of the market by 2025, from current levels of 43%, Gutman says.

Morgan Stanley also notes Ulta Beauty and Sephora have regained market share since the pandemic, and expects skin care - the largest and fastest growing sub category in beauty - to become a bigger part of Ulta.

(Roshan Abraham)

INOPPORTUNE TIME TO TURN BULLISH, MORGAN STANLEY WARNS (0914 EDT/1314 GMT)

The benchmark S&P 500 index is on track for its fourth straight month of gains as investor sentiment and positioning turns increasingly bullish, a 180 degrees shift from the start of the year.

But, investors may be in for a "rude awakening", said Morgan Stanley's Chief U.S. Equity Strategist and Chief Investment Officer Michael Wilson in a note on Tuesday. "Fading fiscal support, less liquidity, and the impact of inflation falling faster than expected contribute to our 2H23 caution," added Wilson.

"Equity markets are as stretched as they can get with market participants wary of missing a potential new bull market."

The S&P 500 is up 14.8% so far this year, while the tech-heavy Nasdaq has jumped 30.8% as big tech and growth firms rally on bets of AI boom since late March.

"We believe in the AI theme... We just don't think it will prevent the deceleration that is already in motion for this year," Wilson said, also pointing to troubling divergence on the Nasdaq.

The Morgan Stanley strategist does acknowledge that they have been "so wrong" about the S&P 500 this year. Nevertheless, Wilson has decided to stick to their growth outlook, with the inflation surprise last week on the downside expected to have a negative impact on top line growth.

For trades, Wilson recommends going long on consumer staples over discretionary, long on defensives over cyclicals, long on healthcare over tech, and long on companies with high operational efficiency over those with low efficiency.

He also cautioned against companies with high financial leverage as the Federal Reserve remains committed to beating inflation and will be slow to reduce interest rates.

S&P 500 INDEX: THE ROCKET MAY BE SPUTTERING (0900 EDT/1300 GMT)

Since its mid-March low, which was around the time of the most intense period of the recent banking sector stress, the S&P 500 index mounted an impressive turnaround.

This recovery kicked off within what some would say was the orb-of-influence of the spring equinox, which occurred on March 20.

Proponents of Gann Theory, or methods of technical analysis developed by W.D. Gann, as well as other traders with an astro-focus, may look for either an acceleration of the prevailing trend, or a reversal, around the summer and winter solstices, as well as the fall and spring equinoxes.

Just looking back over the past five-and-a-half years or so, a number of major reversals in the S&P 500 have developed around these potential turn dates:

The summer solstice takes place June 21 at 1058 EDT/1458 GMT.

Indeed, into last Friday's 4,448.47 intraday high, the SPX has rallied as much as 13% in a little over three months. However, of concern, the index then ended a six-day winning streak, essentially right around a powerful Gann Line intersection which was around 4,445.

E-mini S&P 500 futures are suggesting downside follow-through at Tuesday's open. Thus, the SPX's five-week winning streak may be in jeopardy when the regular session kicks off.

In any event, it remains to be seen if the SPX is primed for a much more severe reversal, or if what has been a rocket-ride off the March trough quickly resumes its flight.

On weakness, traders will be watching SPX support at 4,325-4,311 then 4,250.

Resistance is now at 4,440-4,449 ahead of 4,480 then 4,505-4,535.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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Ulta Beauty