Will December keep its reputation for being the kindest month for U.S. stocks?
December is off to a strong start and is looking to keep its reputation for being the kindest month for U.S. stocks.
“There are several buybacks that do occur in December. Offsetting that though, you've got a lot of people doing loss harvesting, and so that could have some effect on it, but I think in general we’ll probably have a positive month,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors.
Despite strong Thanksgiving weekend sales online, disappointing Black Friday sales at brick-and-mortar retailers had some investors worried December could be off to a rocky start. After all, weak earnings reports from department stores like Macy’s (M) and Nordstrom (JWN) pushed U.S. markets to dip in mid-November.
“They have had a really rough couple of weeks. Their business model is under intense competition,” said Courtney. But his outlook is still optimistic for retailers, “They're all feeling a bit of a pinch, but I think as we approach later in the month, there will be discounting going on and those numbers will come in relatively OK.”
The money manager is overall bullish on the American consumer. “As gas prices of come down, especially recently over the last month, we’ll see that go into areas like consumer discretionary (XLY),” said Courtney.
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Other sectors Courtney favors for 2016 are financials (XLF) and technology (XLK). But he is underweight on basic materials (IYM), industrials (XLI), and utilities (XLU) for next year.
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