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Market Outlook: Tariff Anxiety and Investment Opportunities
According to analysts at Evercore ISI, market uncertainty is expected to reach its peak around the upcoming tariff deadline set for Wednesday. In a recent note, Julian Emanuel urged investors to navigate their concerns over tariffs by leaning towards accumulating stocks.
Emanuel, who serves as the senior managing director at the firm, emphasized the importance of reducing uncertainty in the market during a discussion on CNBC’s “Fast Money.” He noted a stark comparison between the current market sentiment and the turbulence witnessed during the regional bank failures in March 2023.
“The level of pessimism observed this morning, alongside conversations with clients and colleagues, is strikingly reminiscent of the mood during the collapse of Silicon Valley Bank,” Emanuel remarked. “Back then, we faced significant uncertainty about the Fed’s next steps.”
Despite a dismal performance by major indexes recently, with the S&P 500 and the Nasdaq enduring their most challenging quarter since 2022, Emanuel maintains a bullish perspective. The Nasdaq has fallen approximately 14% from its record high achieved in December, yet he believes there are still viable investment opportunities available.
“We anticipate that investors should revisit the previous bull market leaders, particularly in sectors such as technology, communication services, and consumer discretionary,” Emanuel stated. While these sectors were the worst performers during both the month and the quarter, he foresees potential benefits as companies may initiate stock buybacks, thus propelling stock prices upward.
Conversely, Emanuel suggests steering clear of the recent top-performing sectors. “Interestingly, we have observed a trend where sectors have adapted in response to the overall quarterly performance,” he pointed out. “Consumer staples have outperformed, as has the healthcare sector, which may indicate that defensive strategies are being employed in these areas.”
During the first quarter, healthcare sector stocks rose by 6%, while consumer staples gained roughly 5%. Emanuel forecasts a market rebound, setting an ambitious year-end price target for the S&P 500 at 6,800, representing a potential 21% increase from Monday’s closing numbers.
“We do not believe that significant clarity is necessary for a rebound to occur; rather, we need the more extreme scenarios tied to tariffs to diminish in likelihood,” he explained.
Contributions to this report were made by CNBC’s Christopher Hayes.
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