In pre-Christmas trading, markets in the US and Europe bounced after some severe losses in the prior week. Better news about Omicron kept investors buoyant, looking forward to a potential restoration of business-as-usual next year.
Now, a leading analyst, John Stoltzfus of Oppenheimer Asset Management, suggests that Tuesday’s rally might only be the beginning. He foresees substantial gains in stock prices next year, with popular indexes, such as the Dow, hitting new highs.
Negative News About Omicron To Be Short-lived?
According to Stoltzfus, traders should take note. While negative news about Omicron is currently pushing company valuations down, that will all likely change once better data becomes available in the new year.
The new version of the SARS-CoV-2 virus, he explains, is far less pathogenic than many traders currently acknowledge.
It is not, he says, a continuation of the Delta variant, which proved deadly in many cases.
Rather, Omicron is potentially a signal of the end of the pandemic. If it can replace Delta as the dominant COVID-19 strain – as it has done in South Africa and several other countries so far – it could mean the end of government restrictions on the economy.
The virus will be in the rearview mirror next year and the world will return to a semblance of normality, he says.
Stocks Are Likely To Increase In Value Into Early 2022
Following last week’s rout, stocks and the dollar are both seeing increased strength.
The S&P closed up nearly 1.8 per cent on the Tuesday at just 2 per cent below its all-time high. The index is also up around 23 per cent for the year, but Stoltzfus remains convinced that it still has room to go. The Dow is also rising.
In his view, the fundamentals are there for a rally after the holidays. By January, the markets will likely be up again – an opportunity for traders who act decisively now.
The biggest gains are likely to be in industrials, financials, and consumer discretionary companies. Information technology firms will also see their share prices rise on the back of ever-expanding blockchain technology.
The Nasdaq is another compelling option for traders to explore. The index gained more than 2.4 per cent on December 21, posting one of its largest one-day gains of the year.