Investors looking to buy stocks during this year's market volatility should seek out beaten-down names in businesses poised to pop, according Morgan Stanley chief investment officer Mike Wilson. "What you need to be doing right now as an investor is looking for areas that have already corrected or areas where there's probably pent-up demand," Wilson said Monday on " Squawk Box ." Wilson cited three areas that fit his criteria: "consumer services, as we make that transition from business services, and also health care and parts of technology too — where they're already corrected." Last week, Wilson said in a note to clients that the market is "heading into a period of greater uncertainty from a forward guidance standpoint." The strategist has a year-end price target of 4,400 on the S & P 500 . That would be about a 2% decline from Friday's close. "It is the year of the stock picker. It's not about the index anymore," Wilson told CNBC on Monday, following the best week of the year for the S & P 500 and the Nasdaq . However, the Nasdaq remains in a correction. Battered tech stocks bounced Friday despite a better-than-expected January employment growth pushing the 10-year Treasury yield to nearly 1.94%. The benchmark yield ticked lower Monday, but it was still above 1.9% . Stocks were steady in early Monday trading. The jobs report was another sign of a continued economic recovery from the depths of the Covid in an environment of rising inflation. The latest read on consumer inflation is set for release on Thursday, with expectations for a 7.2% year-over-year increase in January, according to Dow Jones. That would follow a 7% year-over-year rise in December. Wilson warned against conflating the economy and the stock market. "The economy is not the markets, and the markets are not the economy," suggesting that a stronger economy does not necessarily mean a strong market, he said. "Even if the economy is okay, we're going to see more disappointments like we've seen here recently in some of the earnings numbers," Wilson said, adding that while he expects inflation to stabilize as soon as the first half of the year, it still needs to peak. Wilson, who's been cautious for months, said that with expectations for the Federal Reserve to hike interest rates multiple times this year — starting as soon as March — coupled with waning spending from consumers iffy on inflation, could slow down growth in the stock market. However, Wilson also reassured investors that despite the looming threat of higher inflation and higher rates, they should remain calm. "We're gonna get through this. This isn't the end of the world." Correction: This story has been updated to reflect Wilson's year-end S & P 500 target is 4,400.
Mike Wilson, Chief U.S. Equity Strategist and Chief Investment Officer at Morgan Stanley.
Adam Jeffery | CNBC
Investors looking to buy stocks during this year's market volatility should seek out beaten-down names in businesses poised to pop, according Morgan Stanley chief investment officer Mike Wilson.