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Where We Stand in the Midst of Covid-19

John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management, Inc., explains his top-down view of markets, the economy and asset allocation.

Sector Views

  1. Technology

    Rating: Outperform

    Rationale: Broad-based innovation wave, net cash and low debt. New technologies to boost productivity across sectors.

  2. Financials

    Rating: Outperform

    Rationale: Low deposit rates, high credit-card rates and a lucrative fee regime support earnings growth, especially at well-capitalized big banks.

  3. Health Care

    Rating: Perform

    Rationale: Covid-19 elevates focus on health care. Longer-term fundamentals remain intact for pharma and biotech.

  4. Consumer Discretionary

    Rating: Outperform

    Rationale: Commerce capability in a social-distancing, shelter-in-place world. The virus presents both risks and opportunities with winners and losers.

  5. Industrials

    Rating: Outperform

    Rationale: Infrastructure program likely in the offing, which will benefit the sector.

  6. Consumer Staples

    Rating: Perform

    Rationale: This defensive sector benefits from Covid-19-related demand surge.

  7. Energy

    Rating: Underperform

    Rationale: Dramatic drop-off in demand related to Covid-19 shutdowns worldwide has a produced a glut that illustrates vulnerabilities within the sector.

  8. Utilities

    Rating: Underperform

    Rationale: Attractive yields, regulatory support should prop up utilities even as reduced economic activity dents earnings.

  9. Real Estate

    Rating: Perform

    Rationale: Negative impact of Covid-19 on commercial and residential subsectors present near and longer term risk.

  10. Materials

    Rating: Perform

    Rationale: Sector likely to be major beneficiary as global growth reasserts when Covid-19 risk subsides.

  11. Communications

    Rating: Perform

    Rationale: Fierce price competition between dominant players and rising cost of content offset by increased demand for streaming services amid Covid-19 crisis.