Oppenheimer sees potential for a post-election relief rally in stocks

Investing.com — A post-election relief could be on the horizon for stocks, Oppenheimer strategists suggested in a recent report.

Despite recent volatility and pullbacks, the firm’s outlook on equities remains positive.

Oppenheimer notes that the market has navigated significant volatility throughout 2024. However, “pullbacks experienced thus far this year have mostly looked like “trims” and “haircuts” for the S&P 500 whenever bears, skeptics, and nervous investors have found a catalyst to take near-term profits without FOMO (fear of missing out) midst what appears to us like a very much intact bull market,” it added.

One of the key factors driving this bullish view is the Federal Reserve’s success in curbing inflation.

The investment bank highlights the Fed’s commitment to reign in the pace of inflation over the past 21 policy meetings has helped underpin the economy and support market sentiment, alongside “resilient corporate earnings.”

Strong job growth and consumer activity have also contributed to expectations of a soft landing for the US economy.

Looking ahead, Oppenheimer touched on the upcoming US presidential race. It emphasizes that the contest remains tight, with the market likely to face both upside and downside risks as Election Day approaches, driven by daily news events.

After the election day, the market “is likely to show some relief that an election outcome is known after which it will seek out opportunities and risks tied to policy that could emerge post-election,” the note adds.

Sector-wise, Oppenheimer continues to favor technology, communications services, consumer discretionary, financials, and industrials.

The firm also expects small and mid-cap stocks to begin experiencing “more sustainable rallies” following the recent Fed’s dovish shift.