Market Recap: Wednesday, November 24

Stocks were mixed on Wednesday following an extended rout in technology stocks. Bill Northey, U.S. Bank Wealth Management Senior Investment Director and Robert Schein, Blanke Schein Wealth Management Chief Investment Officer joined Yahoo Finance Live to discuss.

Video transcript

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SEANA SMITH: Counting down the final minute here until the closing bell. We've got an all-star coverage for you. Bill Northey. He's US Bank Wealth Management's Senior Investment Director. We also have Robert Shein, Blanke Shein's Wealth Management Chief Investment Officer. Let's take a look at where things stand as we head into the close, because we're not too far from the flatline when you take a look at the Dow-- barely positive. We'll see whether or not we can hold on to slight gains there as we flip back below the flatline.

S&P and NASDAQ, though, outperforming. The S&P up just around 2/10 of a percent. We're also seeing the NASDAQ up nearly 1/2 of a percent. In terms of some of the outperformance that we're seeing today, energy leading the way. The XLE up just around 1%, as well as real estate, technology, and consumer discretionary. The underperformers in today's action, you can see financials up there on your screen in the red, and materials the worst performing sector with that sector nearly 0.7%.

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And that is the way to bring down the gavel on the closing bell, and the session is now done this Wednesday before Thanksgiving. Dow is going to settle down about nine points, S&P 500 is going to settle up. And the S&P 500 is going to be positive today, up to about a quarter percent. The NASDAQ is going to be up almost half a percent.

Let's get to our guests. And I'm going to start with you, Robert, because it's something you've pointed out, as a lot of us as just average investors-- I'm referring to people like me, average-- trying to understand why this market didn't shoot up dramatically after the reappointment of Jay Powell. And you've said that the economy is strong, doesn't need interest rates near 0 and significant quantitative easing. So the next big dilemma for the Fed-- and consequently for us as average investors and everyone else-- is how the central bank normalizes monetary policy. What's that going to look like?

ROBERT SCHEIN: So right away, we've also de-risked the uncertainty. You know, that's one of the reasons why the market took in stride. It was a sigh of relief the Biden administration reaffirmed or reappointed Jerome Powell. Now, on a go-forward basis, it split the ticket on that one, because they also put Lael Brainard as the vice chairmanship and there's 3 under down cards that still need to be filled.

Even watching "Yahoo Finance" earlier today, you guys broke some news by having the San Francisco Fed president on. And she basically said-- who's the most dovish of all the board-- she basically said that she's looking towards more of a hawkish stance on a go-forward basis if the inflation information comes forward. So it's going to be the make up of the rest of the Federal Reserve, of how, who's going to get the nominations and, ultimately, be seated, and then how the policy is normalized on a go-forward basis, is really what we're going to have to pay attention to. The Fed, once again, is right squarely in the headline.

SEANA SMITH: Bill, how do you think we're positioned heading into the end of the year? Do we have a strong foundation for a Santa Claus rally, do you think?

BILL NORTHEY: Well, it's our perspective, Seana, that we are experiencing a pretty strong fundamental backdrop, whether we look at the economy-- we've seen very strong labor report. We've seen GDP that is producing at a level, on a year-over-year, basis that is still two or three times what the potential growth rate of the US economy looks like. And we've got a tremendous number of policy supports that continue to be winds at our back, both from a monetary standpoint with the zero interest rate policy-- of course, we know we're nearing an inflection point there-- but certainly, fiscal policy also sets a very strong fundamental backdrop.

And it's translating into corporate performance. We're capital market participants here. We have to make decisions around how to allocate client capital. And our perspective is right now that those fundamental factors are setting up for an environment where equities-- despite valuations that are somewhat at the high end of historical measures, supported by low interest rates and low inflation-- continue to provide an opportunity for us to be equity investors, with a bit of a bullish view into the end of the year.

ADAM SHAPIRO: Bill, listening to what you just said, I wanted to follow up, because we've had a lot of people caution and warn, you know, you want to have some money off to the side. You want to hedge what's going to happen going forward. But if you're a younger person under 50 right now, why keep anything to the side? Shouldn't you be all in equities given what you just said?

BILL NORTHEY: Well, time horizon clearly is one of the fundamental factors that you take into account for portfolio construction. But we do that one client at a time, associated with an individualized financial plan or an investment policy statement. So a younger investor with a longer time horizon certainly should have an appetite for taking a bit more risk, more willingness and ability to take on risk in the pursuit of return and meeting their financial objectives over time. But, of course, that is very much applicable to a single investor and a single set of circumstances.

As we think about the balance between fixed income, and equities, and real assets-- the major asset classes that we construct portfolios with-- right now is a period of time in which fixed income is likely to be a bit more challenged on a go-forward basis. Low nominal yields at this point in time, and we do have base rates that are likely to continue to gravitate higher throughout the balance of this year and, most importantly, into next.

SEANA SMITH: Robert, considering some of the challenges that Bill was just mentioning, I guess where-- how are you evaluating attractive investment opportunities now?

ROBERT SCHEIN: Well, we believe that we're very constructive in the market going forward. He just brought up a lot of great points as to why there's a lot of tailwinds for equities, but it's not for all indices. So as an example, it's a stock picker's market. That's our take here at Blanke Schein Wealth Management. And we're seeing on a daily basis-- as you are, too-- individual names where they're coming out with earnings and they're dropping 10%, or 15%, or 20%. That's why we're holding cash in our portfolios, but then putting that money to work on individual names that are set for the long term and that we really like management-wise and can execute on a go-forward basis.

ADAM SHAPIRO: Robert, in fact, let's follow up with some of the stocks that are getting your attention. For instance, Ford. I was there in Washington when the three auto execs testified a dozen years ago, and Ford was trading around a buck 20. It closed today above $20 again. What is it about Ford you like?

ROBERT SCHEIN: Well, I look forward, and think of it this way. It's the hybrid of all stocks, right? So Ford has the traditional auto sales right now. Everyone's pledged every, you know, EV market to 2030, 2035, and that's where the direction of not only the US but the world is going. But in the short term, Ford has the ability to execute on the traditional-- you know, what they've been very successful at, plus they have a line of the future, right? So they also have 12% interest in Rivian, which was now-- that was a $500 million investment a few years ago. It's worth $10 billion right now.

And ultimately, I don't see them staying. Obviously, they've dissolved their partnership there. But now, they have that cash and that capital sort of in their war chest when they decide to sell to then go forward and then capitalize on both sides-- both the EV market, as well as the traditional auto sales that we're seeing right now. So they're very well-positioned going forward.

SEANA SMITH: Hey, Bill, real quick, one of the things that could potentially stop this momentum that we're seeing in the market is the rise in COVID cases. The market, though, has been able to shrug this off. How long do you think that's going to be the case for?

BILL NORTHEY: Well, one of the fundamental factors that we're looking at as a support for the market is the fact that we've had secularly declining COVID trends. But, of course, we know that this occurs in waves, and as we look around the globe right now, we've seen areas across Northern Europe re-instituting mitigation efforts to help slow the spread. We know that Southeast Asia has a zero COVID policy amongst a number of nations, and that can have sort of fits and starts, stop and start cycles, and impacts on both supply chains as well as broad economic activity.

So we're watching that very closely, but we are heartened by the fact that we're seeing more secular decline in COVID cases. And, importantly, as boosters have been started to be rolled out in a more full manner across the country, as well as additional therapeutics, it's a risk factor that we're watching, but one that we believe will recede as we transition into 2022.

SEANA SMITH: Bill Northey, Robert Shein, thanks so much for taking the time to join us. And we wish you both a very happy Thanksgiving.