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One of the Biggest Bulls on Wall Street Thinks the Market Rally Will Spread Beyond Tech by the End of the Year

June 30, 2024
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John Stoltzfus, the chief market strategist at Oppenheimer, believes it is only a matter of time before the current bull rally extends beyond technology stocks. This year, the technology sector has been the main driver of the market surge, with the S&P 500 tech group leading the charge with a 28% increase in 2024. Among these tech giants, Nvidia, a leader in artificial intelligence, has seen its stock price more than double, climbing 149%. In contrast, the Russell 2000 small-cap index has seen a modest rise of less than 1%.

Stoltzfus told TradeAlgo that the landscape will shift as the Federal Reserve eventually starts to cut interest rates. His year-end target for the S&P 500 is 5,500, which is higher than at least six other forecasts from Wall Street, according to the TradeAlgo Market Strategist Survey.

Currently, Stoltzfus holds an overweight position in equities, anticipating a broader market-cap diversification that will include small- and mid-cap stocks, which are likely to benefit from lower interest rates. He expects that as investors seek to diversify their portfolios and move away from high stock valuations, the market will naturally broaden.

While Stoltzfus remains optimistic about the technology sector, he is also bullish on industrial stocks, which he views as beneficiaries adjacent to tech. Additionally, he sees potential in the financial sector, which could gain from a more normalized yield curve—where short-term rates are lower than long-term rates—as well as in consumer discretionary stocks, which stand to benefit from robust U.S. consumer spending.

According to Stoltzfus, sectors like industrials, financials, healthcare, and consumer discretionary are poised to benefit from the artificial intelligence trend, given their deep integration into the operations of U.S. businesses and the everyday lives of consumers. Within the technology sector, he highlights that investors can find AI winners not just in companies that produce AI chips, but also in those that create related products.

Stoltzfus emphasized that investment opportunities extend beyond the technology firms that manufacture AI chips. "You don't have to be solely invested in companies that generate AI chips," he explained to TradeAlgo. "You can also look at what we call AI proxies—companies that produce PCs, telephones, and other devices that will need to be upgraded to handle the increased speeds and memory capacities that AI will demand."

In summary, John Stoltzfus foresees a broadening of the bull market beyond its current tech-centric focus. He anticipates that as the Federal Reserve reduces interest rates, smaller and mid-cap stocks will gain traction, and investors will diversify their holdings. While still bullish on technology, Stoltzfus also favors sectors like industrials, financials, and consumer discretionary, all of which are positioned to benefit from the ongoing integration of artificial intelligence into various facets of business and consumer life. This broader market expansion is expected to provide ample investment opportunities across a range of sectors, driven by the pervasive influence of AI and the anticipated economic conditions.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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