Stocks rebounded on Wednesday after a late-day sell-off in the prior session.
Five strategists weigh in on what's moving the markets.
JoAnne Feeney, partner at Advisors Capital Management, sees a disconnect in the market.
"Investors are encouraged by the stimulus talk, by the declining Covid cases. But, as you can see, there's still a lot of noise in the market. The sell-off at the end of the day yesterday, typically in tech names, I think reflects that broader concern. And don't forget the whole market has not really gone up as much as that headline number would suggest. High-dividend stocks, for example, are down 25%."
Greg Branch, investor and planner at 1847 Financial, sees the potential for growth in the new year.
"The unique thing that you'll have as we get past the election is you'll have sectors that are poised for triple-digit earnings growth but that are trading at a value price tag. And so when we look at 2021, and overall the whole investment community will start to do that after the election, you have consumer discretionary that is expected to grow at 100%. You have financials expected to grow at 50% yet trading at half their normal average at 1.1 times price to book. You'll have utilities growing at over 100% and energy growing at 600%. And so, I think we're setting up for something that we saw similar to 2010 to 2012 where the S&P 500 ex the tech names is going to grow at 35% versus the tech names growing at 15%."
Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, says the market laggards are playing catch-up.
"The top five names in the S&P 500 are up over 30% year to date, but the bottom five names in the S&P 500 are down more than 50%. But just look at the last week alone. Just the last week alone, you're seeing those bottom five companies, they've rallied significantly … but actually those top five names now are down for the week, so this is more breadth in the market. This is what you tend to see as we move beyond the recession and we get into that economic recovery."
Jacob Walthour, co-founder of Blueprint Capital Management, says markets are still trying to find clarity around the election.
"Typically, this time of the year, earnings would be driving the market higher or lower. And typically, in this point in the election cycle, we would typically see the markets trading rangebound. We have no idea where this election is going to go and which candidate is considered at this stage to be the odds-on favorite or which one will be more palatable from a market perspective. But I think what we're seeing here is a continued effort on the part of the markets to try and hit its historical highs, and it's been nothing short of a V-shaped recovery."
Chris Verrone, head of technical analysis at Strategas Research Partners, says markets are holding up despite tech weakness.
"The expectation was that if tech stumbled, the market would be in a lot of trouble, and that's kind of been the expectation among many for the last several months. Well, tech has kind of paused over the last month. Amazon hasn't made a new high in a month, Microsoft hasn't made a new high in a couple of weeks, and that money has found other areas. So I look at a healthy bull market as one in which participation is getting broader, more stocks are getting involved, and that's been the lesson over the last several weeks, and I think one of the important developments is this resurgence in the transportation stocks, particularly relative to some of the stay-at-home names. So, when you've seen stocks like UPS and FedEx and Expeditors and then you look at some of the broader industrials, Deere, Caterpillar, all getting involved in this move, to me that's a reflection that participation is broadening out and that markets are on pretty good grounds here."
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