Qontigo Managing Director of Applied Research Melissa Brown and Wells Fargo Investment Institute Global Equity Strategist Scott Wren discuss the stock market as it closes on Friday, January 28.
EMILY MCCORMICK: Welcome back. We want to welcome in our panel to discuss the market action from today and this week. And for that, we have Melissa Brown, Qontigo managing director of applied research, and Scott Wren, Wells Fargo Investment Institute senior global equity strategist. But before we head to the both of you, we do want to get one final check of the markets as we head into this closing bell.
As Jared Blikre was mentioning before we entered this segment, we are getting a little bit of an acceleration here. The NASDAQ composite now up more than 3% heading into the closing bell, the S&P 500 up more than 2%, the Dow also in sharply positive territory. And here's the bell.
ADAM SHAPIRO: All right, put it in the history books. And as we just saw from Emily, the acceleration to the upside in the last 15 minutes. Here's where we will settle. The Dow will be up, over 1 and 1/2% gain, 565 points. The S&P 500 up almost 2 and 1/2%, up 105 points. And the NASDAQ up more than 3%, up 417 points. One sector in the red today, energy. But don't lose any tears, crocodile tears, for the energy sector.
OK, let's talk about this with our guests and let's go straight to Melissa because there's been a lot of concern with what we've witnessed in the last couple of weeks with the trend going down. I think most people like a day when things are going-- most people because there are people who like to short stock. But what does the future really hold? We've seen this, and then we lose it the next trading session.
MELISSA BROWN: Well, certainly, that wouldn't be particularly surprising. We've seen investor sentiment that's been not particularly good. Investors have been risk averse for-- and that's been going on for a couple of months now. So it would not be surprising if, you know, you have a weekend and, you know, you kind of look at your holdings and say, wait a minute. Maybe this went a little too much too fast.
EMILY MCCORMICK: Scott, I want to follow up on that question as well with you here. We had the S&P 500 just closing out its first weekly gain after three weeks of losses. Do you think this is the start of the end of the frequent-- or the recent volatility that we saw, or is there more volatility in the cards to come?
SCOTT WREN: Well, Emily, any time the Fed's going from really easy to starting to tighten, there's always uncertainty. But, you know, this has been a stomach churning week. But I tell you, it's been really exciting. This has been-- every day since including last Friday, I mean, this has been a battle of the 200-day moving average and the S&P 500. This has been traders versus investors. Traders are just trying to make some money in the short-term, getting stopped out, running stops, and then investors who are stepping in here to buy.
So, you know, the close, we're right here at the 200-day moving average. You know, this happened quick. Our clients are nervous. But really, we've been telling them when opportunity arises, you need to have a plan and you need to execute the plan. This is when you execute plan. This is an opportunity to buy stocks.
ADAM SHAPIRO: Scott, let me follow up on that because I appreciate your putting it in the context that most of us can understand, the traders and the investors who are driving this. That doesn't, though, bode well for the volatility that then, if I hear you correctly, is going to continue. So when do those of us who don't have the stomach for it get a breather? And would you even give us a price target perhaps on the S&P 500 six months from now, a year from now?
SCOTT WREN: You know, Adam, I think that, you know, this is one of those times-- usually some of the best times to buy stocks is when you really, really don't feel very good about doing that. And so I think that's going to be the case for a while. You know, we're in a bottoming process here. We're not sure exactly how the Federal Reserve is going to play their cards. And I'll be honest with you. We have a target out there for year-end of 5,200 in the S&P 500. Now 10 days ago, that was about 8% away. You know, now it's more like 18 plus percent away.
So we're certainly expecting a good return from here a year from now. You know, we're certainly looking for stocks to be higher. Six months from now, we're looking for stocks to be higher. So this bottoming process, especially when we haven't had a good pullback in quite a while, it's going to take a while because people are nervous. But in our case, we firmly believe that we're seeing a buyer opportunity in here, and we want to take advantage of it.
EMILY MCCORMICK: Melissa, for technology and growth stocks specifically, of course, those had come under some of the most pressure throughout the course of January so far. Do you think this repricing process has fully taken place now for some of these high flying, highly valued names? Or is there further to fall here and, again, more volatility on that front as well?
MELISSA BROWN: You know, I think there's definitely more volatility in-- you know, whether it's in those growth stocks or in other names. It clearly has started and will probably take a while to settle down. In terms of growth stocks, I think what's going to be critically important is what we see as fundamental characteristics. I think for the past few years, investors have depended on Fed easing. And so-- and, you know, maybe some fiscal policy, but mostly what's happened with the Fed.
Well, we now know that, you know, the Fed is very, very likely to tighten. And so what's going to have to make up for that is going to be fundamentals. And so we're going to have to see it in earnings in order for those stocks to continue to do well.
EMILY MCCORMICK: All right, we'll leave it there for now. Melissa Brown is Qontigo managing director of applied research, and Scott Wren is Wells Fargo Investment Institute senior global equity strategist.