2018 will go down as a challenging market landscape for investors, especially in U.S. equities with the three major indexes having their share of struggles, but to one strategist, there appears to be light at the end of the proverbial tunnel.
According to John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, the latest declines provide the perfect backdrop “for upward surprises in 2019.”
The markets closed out 2018 in the green as the Dow Jones Industrial Average rose 265 points, while the S&P 500 gained 0.85 percent and the Nasdaq Composite ticked 0.77 percent higher. It’s been a rough year for U.S. equities with the Dow losing 6.70 percent through Dec. 30, while the S&P 500 has shed 7 percent and the Nasdaq Composite is down 4.632 percent.
Stoltzfus not only sees a rebound forthcoming in the U.S., but globally–this should help quell some investor fears of a global economic slowdown.
“With what we believe to be almost all but the kitchen sink priced into current valuations, we see opportunity for multiples to return to levels seen at the end of the third quarter … with multiple expansions resulting in a global equity rebound in the coming year,” Stoltzfus wrote in a note.
When exactly will this market comeback show itself? Stoltzfus is forecasting that the first quarter should show some signs of the markets resuscitating itself from the pangs of 2018.
“That said, we do not expect a rally of great significance to emerge until sometime into the first quarter of 2019. We look for market risk to weigh on investor sentiment into the new year until catalysts for a rally of some material significance appear on the scene,” he added.
On Monday, the markets got a slight prop up with news that trade negotiations between the United States and China are progressing. A permanent trade deal between the two economic superpowers could certainly help set Stoltzfus’ forecast in motion.
Just had a long and very good call with President Xi of China. Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!
— Donald J. Trump (@realDonaldTrump) December 29, 2018
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