Morgan Stanley Warns Another Oil Price Surge Could Hit U.S. Stocks, Recommends Adding Energy Stocks as Hedge

According to Odaily, Morgan Stanley strategist Michael Wilson stated that another sharp rise in oil prices is the biggest risk currently facing U.S. stocks, and he recommends investors use energy stocks to hedge portfolio risk. Wilson said that if oil prices rise further, it could push yields higher and ultimately force the Federal Reserve to act, as Fed Chair Warsh seeks to bring inflation back to target levels. "At that point, more responsibility will fall on the Fed rather than the Treasury," he said.

He added, "We have no doubt the Fed will eventually respond, but it may not act until after the market experiences additional turmoil." Wilson advised investors to hedge against the risk of a potential oil price surge by allocating to energy stocks. So far this year, shares of both Exxon Mobil Corporation and Chevron Corporation have risen more than 30%, more than doubling the gain of the S&P 500. From a broader perspective, Wilson reiterated his preference for so-called "high-quality stocks"—companies with more stable earnings, higher profit margins, and stronger operational efficiency. (Jin Shi)