With some saying the December Federal Reserve meeting could disrupt the seasonal Santa Claus rally, Wells Fargo Securities equity strategist Gina Martin Adams joined Yahoo Finance to discuss her upbeat view of the markets.
Adams explained that tightening is usually a relatively difficult time for stocks, and that a December launch into a tightening cycle could heighten the difficulty.
“The normalization of monetary policy has and will likely continue to increase volatility in equity markets, via the havoc it creates for emerging markets, commodity prices and export-oriented industries,” according to Adams.
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Despite her caution in the short term, she sees the first hike more likely to mark the end of the beginning rather than the beginning of the end for the bull run.
“In our view, investors should utilize any near-term weakness to add to cyclical positions, particularly in domestic, consumer-oriented cyclicals, where we see low fuel prices, recovering wage growth, and ample financing as particularly supportive of the outlook for growth,” Adams said.
“I’m not convinced that the Fed could completely kill the Santa Claus rally, though I do think that they will throw a lot of snow on it with lot of volatility,” she said.
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