PNC Monetary is throwing chilly water on the fourth-quarter rally.
Covid omicron fears will take a heavy toll on threat appetites over the following two weeks, in accordance to Chief Funding Officer Amanda Agati.
“We’ve already gotten the Santa rally,” she informed CNBC’s “Trading Nation” on Monday. “We’re seeing a little bit of investor fatigue here.”
The foremost indexes kicked off the week within the crimson. The S&P 500 is down 3% over the previous three days. It is the index’s worst three-day slide since September.
In the meantime, the tech-heavy Nasdaq is down virtually 4% in the identical time span.
“In addition to the omicron fears and negative headlines swirling around, I think investors are kind of locking in some of those gains and ready to go on Christmas vacation,” she mentioned.
But, she does not see a deeper drawback.
“We don’t think this is going to lead to a significant market correction,” mentioned Agati, who famous liquidity is pretty low this time of yr.
Agati’s optimism hinges on omicron having fewer extreme repercussions than earlier Covid-19 strains. Her longer-term 2022 forecast, which got here out Monday, is constructed on the idea omicron won’t lead to hospitalization spikes, financial shutdowns and extra provide chain bother.
Despite the fact that her top wildcard is Covid, her base case is that 2022 might be a robust yr for the market. Plus, she believes one among this yr’s greatest losers will stage a serious rebound.
“EM [emerging markets] is very well positioned, but it’s been absolutely punished from the regulatory overhangs. What I think will be interesting in 2022 is we’ll start to see some of that… China regulatory backdrop fade,” Agati mentioned. “That would really be the shot in the arm that emerging markets need to outperform in 2022.”