One strategist says he is optimistic about equity markets next year, favouring U.S. equities over international stocks.
In an interview with BNN Bloomberg Monday, Scott Wren, senior global equity strategist with the Wells Fargo Investment Institute, said that investors should look past any near-term volatility and instead look to buy the dips. He added that dips have been “few and far between,” with only one pullback occurring since October 2023 that took place in August of this year.
“So, what we’re trying to do is we’re leaning into stocks, we’re leaning into sectors like financials and industrials, communication services. And we like energy if oil’s in the US$65 to $70 range, we want to be overweight energy,” he said.
Wren added that if a pullback occurs in equity markets it could likely be attributed to fears surrounding inflation, and the action the U.S. Federal Reserve may take.
“I think those are the kind of things that might cause some downside volatility, and we want to be ready to step in if we get the opportunity because we think the stock market, the S&P 500 is going to be higher by year end 2025,” he said.
Wren added that he sees U.S. stocks as better positioned compared to international equities. He said that the U.S. typically leads world markets toward slowdowns or recessions and conversely leads them out.
“I think we probably have a couple of slow, maybe three slow quarters ahead of us, not dramatically slow but slower than what we’ve seen… but U.S. stocks over international, that’s definitely where we’ve been for a while and I think that’s going to be the right call at least over the course of the next few months,” Wren said.
Going forward it will be difficult to determine what impact new U.S. tariffs imposed by Donald Trump’s incoming administration could have, according to Wren, who said it could impact inflation in the short term.
“The goal of these tariffs is to build up industry (and) manufacturing here in the U.S.,” he said.
“So, I think the ultimate goal is good but what happens between now and then and what happens to inflation, that’s where things become uncertain.”