The stock market is surging from its worst start to a year in half a century. However, the volatility is far from over and investors should prepare for higher risk to earnings ahead, Morgan Stanley said. The S&P 500 index recorded its worst first half of the year since 1970 while the Nasdaq Composite plunged into a bear market. Record-high inflation fueled a cycle of aggressive interest rate hikes from the Federal Reserve, and the war in Ukraine sent oil and grain prices higher. Rates have fallen in recent weeks amid a string of disappointing economic data, while futures earnings estimates on the S&P 500 and Nasdaq 100 are 20% above their post-financial crisis trend. globally, Morgan Stanley noted. However, investors should view the yield cut “as a growth concern rather than the possibility of easing pressure from the Fed/inflation,” wrote analyst Michael Wilson. “But until earnings estimates are cut to a more reasonable level or valuations reflect that risk, the bear market is not complete,” he said. “The Q2 earnings season should be a good start in that respect.” With even more at stake, Morgan Stanley has shared a list of stable-earning stocks to help clients secure their portfolios in the coming months. These options are loved by the bank, are among the top 1,000 US stocks by market capitalization, and boast earnings stability in their top 20% of industries. “Companies with stable earnings tend to have lower estimate dispersion, lower ROE volatility, and lower sales growth volatility,” says Wilson. “The market is rewarding companies with steady earnings, sales growth, and more consistent Street estimates.” Here are some of the names that made the list: Technology stocks took a heavy hit in the first half of the year as investors moved away from growth companies and fears of a recession intensified. Microsoft and Meta Platforms fell 23% and 51% respectively, but still kept Morgan Stanley’s earnings steady. The bank recently added Meta to its list of tech stocks to buy if the economy continues to slow down. Meanwhile, Microsoft dominates among analysts’ favorite Dow stocks in the second half of 2022, according to a recent screen from CNBC Pro. Energy stocks started the year on the back of strong oil and gas prices. Exxon Mobil, which is trading up 32% this year, also made the Morgan Stanley list. Last month, the integrated oil and gas company hit a new all-time high of $104.59, topping $100 for the first time since 2014. Sportswear retailer Lululemon Athletica, Walmart, BlackRock and beer and wine maker Constellation Brands are also among the equities bank’s steady earnings.