Reuters
- Wells Fargo’s chief investment officer Kirk Hartman thinks the worst is over for the US stock market.
- Hartman told CNBC’s “Street Signs Asia.” “I do think there will be more volatility but I think we have seen the worst of the sell-off.”
- Stock markets have rallied so far on Monday and Tuesday, after the Nasdaq posted its worst weekly drop since March last week.
- Hartman said markets are pricing in a good recovery in 2021.
- He said: “As long as that happens, I think the market while a bit stretched is fairly valued.”
- He said he expects the gap between value and growth stocks to close.
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The US stock market has lived through the worst part of its sell-off, Wells Fargo’s global chief investment officer Kirk Hartman said Tuesday.
“I do think there will be more volatility but I think we have seen the worst of the sell-off,” Hartman told CNBC’s “Street Signs Asia” in a pre-recorded interview released Tuesday. “What is interesting to me is the market has priced in a very good recovery in 2021 and, as long as that happens, I think the market, while a bit stretched, is fairly valued,” he added.
Hartman joins other banks such as Goldman Sachs in predicting that the worst for the US stock market is over.
US markets closed lower last week, after a sell-off in large-cap tech firms, like electric vehicle maker Tesla.
Stocks recovered this week after all three major stock market indices closed lower on a weekly basis last Friday, and the tech-heavy Nasdaq posted its worst weekly drop since March.
As of 10:28 am ET, all three indices were trading in the range of 0.6-1.1% higher.
In the "stay at home economy" tech stocks have outperformed and helped markets reach all-time highs. The S&P 500 has for example increased more than 50% since touching coronavirus lows in March helped by a low interest rate environment and outperformance of tech stocks.
But Hartman thinks the future movement of growth stocks will determine how sustainable the recovery is.
"For me what is more interesting is if the value stocks which are a more general measure of the economy continue to catch up with the large mega-tech growth stocks," he said.
"If interest rates stay low a lot of the financials will continue to have a difficult time just because they will be under pressure. But I do think a lot of the growth stocks will continue to do very well in a low rate environment," Hartman said. "I do think the gap between value and growth will close."
But not all market watchers are convinced the worst for markets are over. BTIG's chief strategist Julian Emmanuel said Monday a 'very abnormal' trading pattern suggest stocks markets still have a lot further to fall.