To be sure, strategists’ forecasts are getting further and further away as the recent drop in stocks is making the targets appear more bullish than their outlooks suggest. The Dow has posted intraday swings of 250 points or more (about 1 percent) in 44 of the 54 days of the fourth quarter amid a spike in volatility that’s making it more difficult to forecast.
On a sector-by-sector basis, Wall Street’s strategists still favor beaten-down information technology, health-care and financial services stocks. The sector should offer investors “superior growth” in the new year, while the recent sell-off has decoupled the tech stocks from a crowded momentum trade, J.P. Morgan strategist Dubravko Lakos-Bujas told clients.
“Technology also possesses lower sensitivity to macro factors (e.g. rate, USD, oil) and should continue to benefit from elevated buyback activity,” Lakos-Bujas added. “Such characteristics are typically sought after by investors in late cycle. We overweight Consumer Discretionary as a direct beneficiary of an expanding labor market and wage increases with some incremental upside from potential trade resolution.”
For her part, RBC chief strategist Lori Calvasina wrote that she’s staying overweight on health care while underweight utilities and REITs.
“Healthcare has the highest 2019 composite score based on: 1) outperformance at this stage of the cycle, 2) better margin trends, 3) little tariff risk, 4) dividend upside, and 5) solid growth and momentum,” she said in a note.
Real estate, consumer staples and utilities were among the least favor sectors across Wall Street.
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