Markets sold off Tuesday after a spike in yields hammered tech stocks.
Here’s what five experts have to say about stocks now.
Tom Lee, Fundstrat’s head of research, said the noise out of Washington, D.C., that contributed to investor nerves was not a deal breaker for markets.
“I know investors don’t like when there’s policy turmoil in Washington, but anybody just needs to look at the last 30, 50, 100 years, and then realize when Washington plays tough, that’s not a time to panic on stocks .… I don’t want to sort of say it’s a guarantee but it’s almost always been a great buying opportunity. So, I think that there’s been a lot of damage done to the growth and the tech trade and the S&P technicals but to me, this just seems like a precursor to a consolidation before a big move higher.”
Stephen Weiss, founder of Short Hills Capital Partners, is at a loss to find many positives in this market right now.
“My view in the market has been pretty consistent that I just don’t see the positive catalysts ahead. I see lots of negative catalysts but I’m hard pressed to think of anything positive. And let me just go through a few of them – first of all, retail as we see from the flows have stopped buying the dips the same way they were last year. That’s No. 1. No. 2, supply chain issues have worsened, labor issues have worsened. And when you see that filter through to companies, and a number have already had down earnings … because you’re through the post-pandemic push, that you’re going to see margin compression throughout every sector virtually, maybe not energy at this point, but through most other sectors, plus you’ve got a yield that keeps moving higher.”
Chris Grisanti, chief equity strategist at MAI Capital Management, said the developments seen as negative are actually positive for markets.
“I would be a buyer of equities here and I think what we’re doing is coming to really the end of a delta variant-induced slowdown, and I think it’s the end because we’re starting to see some things that people are taking as negatives – for example, oil is going up, interest rates are going up, but that’s not a bug. It’s a feature of a growing economy. And sure, does anybody love higher rates? Not necessarily, but if they’re a byproduct of a growing economy and that economy continues to grow next year, I think we’ll be just fine and I’d continue to buy equities.”
Jim Breyer, founder and CEO of Breyer Capital, is sticking with tech.
“I don’t make much of the sell-off [Tuesday], but for the last two years when the mega-cap tech stocks sold off significantly, I’m a buyer. And the reason is they are also the leaders in all the next-generation technologies, whether it’s artificial intelligence, AR/VR, quantum communications and computing. Alphabet, Microsoft, Apple, these are the best companies in the world. And so I continue to believe that over the next three to five years, they’ll continue to outperform.”
Dan Niles, founder and portfolio manager at the Satori Fund, sees this pullback as a resetting of expectations.
“Don’t forget a lot of tech companies have benefited last year from the global pandemic – streamed more movies, bought more things through e-commerce, etc. And so, there was this massive uptake during that period of time. And now what you’re seeing is streaming companies are missing forecasts, e-commerce companies are missing forecasts.”
