Even as focus turns to the upcoming presidential election, Morgan Stanley thinks the business cycle will matter more for stock picking. The recent rise in yields following optimistic economic data, including last week’s wholesale inflation report, could indicate that the bond market is beginning to part with some of the growth concerns on the hope that the economy is on stable footing, equity strategist Michael Wilson wrote in a research note Monday. He added that this trend provides greater confidence in cyclical stocks, which are positively correlated to upward moves in the 10-year Treasury yield. Wilson expects both rates and economic data to support cyclical stocks. The group should also benefit from a rebound in capital market activity, an improved lending environment and a pickup in stock repurchases. His call comes as the S & P 500 rose to a fresh record high on Monday, supported by better-than-expected results from a handful of companies that have reported third-quarter results. Investor sentiment remains high as Wall Street hopes the slate of reports this week can continue the outperformance. Here is a look at some of the cyclical stocks Morgan Stanley is watching. All the companies on the list are rated overweight by the firm. Artificial intelligence darling Nvidia made the list. Shares have advanced more than 178% in 2024. Nvidia has continued to benefit from still-robust demand for artificial intelligence applications, which has spurred much investment across industries in its powerful graphics processing units, or GPUs . NVDA YTD mountain Nvidia stock. Goldman Sachs analyst Toshiya Hari raised his price target on Nvidia last week, citing optimism that Nvidia can grab more business from AI inference , or when an AI model is fed new data and makes a prediction or solves a task based on its training. Wells Fargo also made the cut. Shares of the banking stock have gained more than 27% in 2024. WFC YTD mountain Wells Fargo stock. The firm reported better-than-expected third-quarter results last week, sending shares higher despite a drop in net interest income. Wells Fargo also repurchased $3.5 billion worth of stock throughout the quarter, which marked a 60% increase from the same period a year ago. “WFC stands to benefit the most of our coverage universe from higher interest rates while it has made significant investments in its control functions since its retail banking sales practice issues came to light,” Barclays analyst Jason Goldberg wrote Wednesday, as he reiterated an overweight rating on the stock. “The eventual lifting of regulatory restrictions also represents a potential catalyst looking out,” Goldberg added. Other names on the list include Google parent company Alphabet and delivery service DoorDash .