Market recap: Friday, Dec. 3

Dan Wantrobski, Janney Montgomery Scott Technical Strategist and Gregg Fisher, Quent Capital founder and portfolio manager, join Yahoo Finance to decipher why stocks were down Friday and where investors could look for safety.

Video transcript

[MUSIC PLAYING]

ADAM SHAPIRO: All right, we are setting up for another down day but not-- you know, it seems as if we're decelerating from the losses. We're going to talk about where these markets will settle in just a bit. But when we get the closing bell and the gavel has fallen, we're going to break it all down with two guests who are going to help us explain the action we're witnessing.

Dan Wantrobski is a Janney Montgomery Scott technical strategist. And we've also got Gregg Fisher, the founder, and portfolio manager at Quent Capital. And Dan, let me start with you, a lot of people get very nervous, many people, many of us are very short-term sighted and yet long-term, you're telling your clients you know, look, there's still going to be a lot of upside to the S&P over the next what, two, three years?

DAN WANTROBSKI: Yeah, absolutely. You know, everybody's concerned obviously with major macro disruptors right now, the Fed, obviously COVID, and the variants that are coming around, potential lockdown, obviously inflation data as well. And you've got to remember coming into this correction over the last couple of days, the markets, the S&P in particular, the NASDAQ in particular, were very overbought. In fact, we haven't seen long-term charts on the S&P and NASDAQ this overbought for a few decades at this point. So the markets are hypersensitive to headline risk right now.

But that being said, and corrections aside, we think the US is still astride a very strong reflationary expansion cycle. We do not think it's at its end stages. And in fact, we think the S&P 500, which is correcting but still trading around 4,500 or so we think in the years ahead it's probably going to print a target closer to 5,000, possibly even 6,000.

We think this is a combination of a number of factors that kind of drive things underneath the surface, folks aren't really talking about it but you got things like demographics, liquidity, massive demand from reopening. And so there's a number of factors that we think are going to push the multiple higher. So we're actually--

ADAM SHAPIRO: We'll hit those factors. I'm going to cut into you because we got to set up for this bell. We're going to hit those factors right afterward and then I want to get Gregg in on you know, what happens with-- I know we always talk about the Dow but really, the S&P 500 where are we headed, and maybe some price targets we should consider and support levels for the S&P 500. But right now let's see where we're setting up, we've got sectors trading down today, for instance, consumer discretionary off almost 3%, consumer staples, by the way, believe it or not, consumer staples, that sector trading higher, up about 1.4%.

[MUSIC PLAYING]

But right now here is the closing bell for this Friday.

[BELL RINGING]

With a vengeance, he pounds that gavel. All right, we got a closing bell, we've got the session done for the week. Let's take a look at this, the Dow is going to be off 60 points today, barely a quarter of a percent, S&P 500 off the session lows, will close down 38 points almost 1%. NASDAQ is off almost 300 points, down almost 2%.

Gregg, let me bring you into the discussion, because the fact that usually in the last 5 to 10 minutes we accelerate on a day like this to the downside. We pulled off of the session lows. Do you take anything away from that or is that just people you know, playing games?

GREGG FISHER: I don't think there's anything like-- there's so many things we could point to. But I wouldn't point to any one particular thing. Look, it was a volatile day, there's a lot to be worried about. There's a lot of uncertainty. And any of us analysts that are trying to run you know, projections on our spreadsheets six months, three months, a year, two years into the future. It's very hard to do that right now. There's a lot of uncertainty, and of course, the narrative around inflation is one in particular, along with Omicron variant. I mean, I think there's just a lot to worry about. Markets are volatile right now.

ADAM SHAPIRO: So let's-- I'm going to start first with you, Gregg but then, Dan, I want you to respond. You hear that refrain in this household almost every day, pay attention to me at this moment. So at this moment we're getting a whole lot of data, which look, the jobs report was interpreted as mixed, some are calling it bad. And yet within that report, there are some silver linings. We had a guest last hour point out that look, the Fed is going to get some time because of this issue, especially if we get the inflation numbers next week not as bad as people are expecting, they might not have to move as fast. So Gregg first, at this moment in time as an investor, do I need to take profit off the table, especially if I'm under 50 years of age or should I just be riding this out?

GREGG FISHER: I think if you're somebody who has just experienced what, the 250% increase in markets over the last decade depending on what it is you're invested in, or the 100% increase we've seen in the last couple of years, depending on what you're invested in. I think now's a really good time to reevaluate your risk. I think that if people are concerned about a 2%, 3%, 4%, 5% decline in markets in a particular month, you know, given what we've just experienced, I think now's a really good time to take a step back, possibly take some cards off the table and reevaluate.

But that's very different than a market timing decision. You know, I think we all know how difficult that is. I mean, if you just think about this, the worst day you could have invested in the S&P 500, not the worst year, not the worst month, not the worst week, but the worst day since World War II was October 9th, 2007. And if you bought the S&P on that day and held through today I think you're still up like 10% a year. So you know, market timing is a tough one, but I do think it's a good time to reevaluate your risk tolerance given the run-up we've had and maybe it is time to reduce your risk.

ADAM SHAPIRO: Dan, same question to you, for investors at this moment in time with the data we're getting, is it-- should reduce risk or you know, stay in?

DAN WANTROBSKI: Yeah. No, and I-- you know, again it depends on the investor. I like your demarcation of you know, under 50, over 50. I think younger investors that are going to take a long-term approach to their portfolios, I think the market, it always throws us corrections. Every secular bull market has major correction cycles, sometimes cyclical downturns, sometimes flash crashes. And they scare us all and they're really used to clear out a lot of the froth. But nonetheless, they typically-- and you look in hindsight, they provide great buying opportunities.

I think there's-- despite all the near-term uncertainty out there, there's many tailwinds behind this market. I think if you look at the Fed itself and what it's done over the last 12-plus months, they've injected so much liquidity, have increased the money supply so much, it's virtually exponential, that there's right now too much money facing too few parking spaces in the financial markets. And I think as long as we have moderate growth. I think look, you can see inflation, we consider this really reflation because remember, interest rates are coming off of historic lows. We were on real terms in negative territory just a few months ago.

So interest rates, it's not all about stagflation or hyperinflation right now, this is reversion to mean in interest rates. The question is, can you have multiple expansion, economic expansion, in a rising rate environment as long as there is projected moderate and steady growth ahead. And we think absolutely, we're going to continue to advocate short-term corrections are going to hit us, but for those investors with a longer-term view, we believe they should stay the course.

ADAM SHAPIRO: So let me just ask both of you, we literally 20 seconds each, I'll start with Dan and you set up the question perfectly because we're going to get the CPI number next week. Is it going to be the kind of thing that has investors pulling their hair out, oh my gosh, my hair's on fire because now the Fed's got to raise interest rates, or is it the kind of thing just ignore that number next week?

DAN WANTROBSKI: So I think everybody's going to be pulling their hair out and it's to your point earlier, everybody is so myopically focused on every data point that is hitting literally every minute. I mean, we're all plugged into these news feeds and tweets and everything. And as I had mentioned at the beginning, markets are very overbought. We were trading at all-time highs just a few days ago. So they're hypersensitive to any kind of economic data that's going to trigger those fears. Remember there's a lot of fear out there but the markets love to climb a wall of worry. I think that's absolutely what they're [INAUDIBLE].

ADAM SHAPIRO: Yeah, Gregg, what do you think, should we ignore that number next week?

GREGG FISHER: Well, I don't pull my hair out anymore because you know, I don't waste my time on that. But I think there's things you can do. Inflation is a big concern, people should be worried about it. I think it is a concern. We should be worried about it. We haven't had it in a while, we have it now. I went out and bought some pizza the other day and it was expensive. And I think we're all experiencing that, it's very real. And rising interest rates and inflation are the enemy to the financial asset, especially growth stocks, which so many investors have loaded up on.

Sure, in the long-term I think staying invested makes sense but I'd look through your portfolio. What do you have right now in your portfolio if you're an investor that could benefit from inflation, whether it's commodity markets or the kinds of investments that produce good returns in an inflationary environment? There are beneficiaries of inflation, things to consider. But I do think it's worth paying attention to. I just wouldn't pull your hair out over it, I'd focus on what you can do about it.