The S&P 500 will soon see more 3-7% drops followed by new highs in ‘stairstep’ rally similar to 2009, Wall Street strategy chief says

News
trader screen

Summary List Placement

 

The S&P 500 will see more 3-7% drops and then new highs as it “stairsteps” higher like in the fall of 2009, according to Canaccord Genuity’s chief market strategist. 
In Monday note, Tony Dwyer said that he expected a pullback favoring stocks in the “economic recovery sector,” and investors should add exposure to this theme when pullbacks like last week’s occur.
Dwyer also said that making an investment decision based on the political landscape “would be simply guessing.”

Visit Business Insider’s homepage for more stories.

Investors should expect more drawdowns for the S&P 500 in the 3-7% range before the market “stairsteps” higher like it did in the 2009 recovery, according to Canaccord Genuity’s Tony Dwyer.

The chief market strategist said in a recent note that a pullback in favor of “economic recovery” sectors over stay-at-home stocks was expected, and the 7% correction in the S&P 500 over the  last week has reflected that theme.

Dwyer added that over the last six trading sessions before Monday, all 11 SPX sectors were negative, with “significant relative outperformance” in economic recovery sectors like industrials, materials, financials, emerging markets, and the Russell 2000 index. 

Read more: MORGAN STANLEY: Buy these 6 stocks poised for gains as the economic recovery continues and Congress mulls more coronavirus stimulus

The strategy chief expects further volatility over the coming weeks and months as election uncertainty rises and the coronavirus looms. He said investors should “stick with the stairstep playbook” and add exposure to economic recovery stocks during pullbacks like last week’s.

  The GOP reshaped America to hold onto power — can the Dems do the same thing to save it?

“To make an investment decision based on the political landscape at this point would be simply guessing,” Dwyer said, “So we remain focused on what we know – the continuing pandemic coupled with the lack of further fiscal action means the Fed is likely to reinforce or even accelerate its aggressive monetary policy when it meets this week.” 

Join the conversation about this story »

NOW WATCH: How waste is dealt with on the world’s largest cruise ship

…read more

Source:: Business Insider

      

(Visited 1 times, 1 visits today)

Leave a Reply

Your email address will not be published. Required fields are marked *