London — The market’s leaders have gone missing this earnings season. For Morgan Stanley, that’s a worrying sign that the stock rally may have exhausted itself. Despite more than 85% of S&P 500 members beating analyst estimates, the type of pro-cyclical companies you’d expect to surge amid banner earnings have been falling behind. Not even the biggest winners of the year are posting reliable gains, as earnings misses from the likes of Netflix and Facebook hamper the momentum trade. As such, risks to the July stock rally are building, and with peaking growth rates and extended positioning, the three-day slide that started Thursday will only get worse, Morgan Stanley analysts said. "The selling has just begun and this correction will be the biggest since the one we experienced in February," Morgan Stanley equity strategists led by Mike Wilson wrote in a note on Monday. "It could very well have a greater negative impact on the average portfolio if it’s centred on tech, consumer discret...

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