Meme, mine and yours
The potential for a broadening participation in the stock market rally reminds us to emphasize the importance of prudent diversification and quality assets in times of economic and policy transition.
Key Takeaways
- This week a diverse array of widely followed companies in the S&P 500 could carry the direction of the markets along with a relatively light calendar of economic data.
- Better than expected inflation numbers drove stock and bond prices higher last week.
- While the markets have priced in a rate hike in July, a second hike in the remainder of the year may not be as likely should inflation continue to improve.
- Valuations appear attractive in a number of US sectors and market capitalizations, offering the potential for a broadening of the rally.

In our view the CPI and PPI numbers released last week pointed to the Federal Reserve’s having made significant progress in stemming the pace of inflation—and without pushing the US economy into recession—at least thus far. Of course the lag effect of the rate hike cycle is still to be seen but “so far so good.”
Resilience shown over the course of this year by labor, the consumer, and business has also contributed to improved sentiment in the stock market with signs or “green shoots” that the rally that emanated from the lows last year on October 12 is beginning to broaden into more than participation by just a few stocks (those coined by some as “the magnificent seven”). A glance at the broader participation among stocks across sectors, market capitalizations and style suggests that both stock pickers and index investors are likely to have more to work with as the year progresses.
We suggest that investors consider (when appropriate to their experience, needs and objectives) utilizing an Alpha/Beta approach taking advantage of singular opportunities in specific securities as well as of the potential offered to the broader exposure an investor can capture with passive or active index exposure via ETFs.
Better than expected inflation data, a sense that the Federal Reserve’s efforts at curbing inflation have made significant progress along with better than expected results from companies thus far reporting in the S&P 500’s Q2 earnings season gave support to the upward move in stocks last week.
We are now seeing the end of “free money” (historically low interest rates) to a more normal environment in which bond issuers pay for the privilege of borrowing money and bond buyers get something in return for lending their money to bond issuers in the form of interest rates at levels higher than have been prevalent over most of the past 15 years. A more normalized environment looks to be a good thing to us notwithstanding the levels of uncertainty any change brings.
While highly leveraged players in the market are feeling the pinch of higher rates on their market bets, irrational exuberance and “fear and greed” trading could be curtailed somewhat going forward to the benefit of fundamental investing. Time will tell.
Fixed income for investors with intermediate and longer-term goals continues to appear to us as highly complementary rather than competitive versus stocks with the ownership interest of businesses represented by stocks potentially providing in our experience a broader opportunity set for gains over the longer term.
The rally in bond prices last week should serve as a reminder that interest rates paid by bonds and other instruments (such as CDs) can rise and fall in terms of what’s available to choose from without much notice.
Fixed income maturity dates and call risk (in corporate debt and municipal debt for example) can represent a challenge on maturity and reinvestment when rates begin to move lower.
In the week ahead 60 S&P 500 companies are scheduled to report results for the second quarter. So far, results have been better than expected though with just 28 firms having thus far reported it’s way too early to tell the outcome for the season. (See page 8 of this report for our earnings score card and comments.)
Last week three of the largest banks in the US reported results that surprised to the upside likely capturing investor focus for this week when other widely held major US banks report results along with a diverse array of widely followed companies in other sectors that will step up to the plate to report results as well.
We remain highly constructive on equities on expectations that economic fundamentals are likely to remain resilient if not robust in this period of significant transition tied to monetary policy, stateside and global markets, domestic and geopolitical risks and the demographic, cyclical and secular trends that drive them.

John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
DISCLOSURES
Strategist Certification - The author certifies that this investment strategy report accurately states his/her personal views about the subject securities, which are reflected in the substance of this investment report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this investment strategy report.
The strategy provided in this report is provided by Oppenheimer Asset Management Inc., (“OAM”) a registered investment adviser affiliate of Oppenheimer & Co. Inc. (“OPCO”). It reflects analysis of fundamental, macroeconomic and quantitative data to provide investment analysis with respect to U.S. securities markets. The overview in this report is provided for informational purposes and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security or investment advisory services. The report is not intended to provide personal investment advice. The investments discussed in this report may not be suitable for all investors. Investors should use the analysis provided by this report as one input into formulating an investment opinion and should consult with their Financial Advisor. Additional inputs should include, but are not limited to, the review of other strategy reports generated by OAM, its affiliates, and looking at alternate analyses. Securities and other financial instruments that may be discussed in this report or recommended or sold by OPCO or OAM are not insured by the Federal Deposit Insurance Corporation and are not deposits or obligations of any insured depository institution. Investments involve numerous risks including market risk, counterparty default risk and liquidity risk. Securities and other financial investments at times may be difficult to value or sell. The value of financial instruments may fluctuate, and investors may lose their entire principal investment.
Strategist Certification - The author certifies that this strategy report accurately states his/her personal views about the subject matter reflected in the substance of this report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this strategy report.
Potential Conflicts of Interest: Strategic analysts employed by OAM are compensated from revenues generated by the firm. The strategists authoring this piece also contribute to an OAM managed portfolio product that relies on and trades on the information contained herein. The managed portfolio strategy trades frequently, both ahead of and after the publication of this report. OAM generally prohibits any analyst and any member of his or her household from executing trades in the securities of a company that such analyst covers. Additionally, OAM generally prohibits any analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% (or more) ownership positions in covered companies that are required to be specifically disclosed in this report, OPCO may have a long positon of less than 1% or a short position or deals as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon and makes a market in the securities discussed herein. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.
Third Party Research Disclosure OAM has a research sharing agreement with OPCO pursuant to which OPCO provides OAM Strategy thought pieces to its institutional and retail customers. OPCO does not guarantee that the information in OAM Strategy reports is accurate, complete or timely, nor does OPCO make any warranties with regard to the strategy product or the results obtained from its use. OPCO has no control over or input with respect to opinions found in OAM strategy pieces. OAM is a registered investment adviser affiliate of OPCO.
This report is issued and approved by Oppenheimer & Co. Inc., a member of all Principal Exchanges, and SIPC. This report is distributed by Oppenheimer & Co. Inc., for informational purposes only, to its institutional and retail investor clients. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The strategist writing this report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security discussed in this report, the recipient should consider whether such investment is appropriate given the recipient's particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal.
Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete and they should not be relied upon as such. All estimates and opinions expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation.
Investment Strategy should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser.
This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. The S&P 500 Index is an unmanaged value-weighted index of 500 common stocks that is generally considered representative of the U.S. stock market. The S&P 500 index figures do not reflect any fees, expenses or taxes. This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which is authorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This report is for distribution only to persons who are eligible counterparties or professional clients and is exempt from the general restrictions in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the UK only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) High Net Worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to, and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA’s protection rules nor compensation scheme may be applied. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright © Oppenheimer & Co. Inc. 2023.