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‘Peak issues’ for supply chains create portfolio opportunities: Chief market strategist

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As the pandemic rages on with the emergence of the Omicron variant and markets on high alert as a result, whether or not there will be a “Santa Claus Rally” remains up in the air. According to Victoria Fernandez, chief market strategist at Crossmark Global Investments, however, the easing of supply chain issues may be an opportunity for investment.

Fernandez cited the recent report from ISM, which noted an uptick in U.S. manufacturing activity and a lowering in prices paid for the month of November, as being a positive indicator for markets in spite of the new COVID-19 variant.

“We're looking at possibly, before the [ISM report] came out, peak issues with supply chains. We're seeing prices start to stabilize. We're seeing supplier delivery times start to stabilize,” Fernandez told Yahoo Finance Live. “So, fundamentals are good. It was something that we expected. And then what we're hearing so far is that, yes, this is maybe a more transmissible variant, but it's not as severe in the symptoms that we're seeing.”

FILE - Containers are stacked at the Port of Long Beach in Long Beach in Calif., Oct. 1, 2021. U.S. manufacturing activity grew at a faster pace in November as companies continue to struggle to keep up with demand amid ongoing supply shortages and delays. The Institute for Supply Management, a trade group of purchasing managers, said Wednesday, Dec. 1, 2021 that its index of manufacturing activity rose to a reading of 61.1 in November, just above September’s 60.8. Any reading above 50 indicates growth in the manufacturing sector. (AP Photo/Jae C. Hong, file)
FILE - Containers are stacked at the Port of Long Beach in Long Beach in Calif., Oct. 1, 2021. U.S. manufacturing activity grew at a faster pace in November as companies continue to struggle to keep up with demand amid ongoing supply shortages and delays. The Institute for Supply Management, a trade group of purchasing managers, said Wednesday, Dec. 1, 2021 that its index of manufacturing activity rose to a reading of 61.1 in November, just above September’s 60.8. Any reading above 50 indicates growth in the manufacturing sector. (AP Photo/Jae C. Hong, file)

And although markets may have experienced a recent pullback due to Omicron fears, Fernandez believes that now may be the right time to buy.

“But you know what? You use it as a consolidation in the market,” she added. "But I think if there's certain names you've been wanting to add to your portfolio, you can use this to your advantage.”

Fernandez joined Yahoo Finance Live to share her perspective on the market reaction to supply chain issues and the Omicron variant, the Fed's course of action, as well as stocks to invest in. Founded in 1987 and headquartered in Houston, Texas, CrossMark Global Investments is an investment management firm that provides investment strategies to institutional investors, financial advisors, and the clients they serve.

Black Friday sales

Black Friday online sales typically rise year-over-year, with a growing number of consumers becoming more comfortable with shopping from home. However, Adobe (ADBE) estimates that combined Black Friday and Thanksgiving internet sales declined slightly in 2021 from $9 billion in 2020 to $8.9 billion. And while the drop may not be substantial from a numbers perspective, what the dip could mean for corporate earnings through to the end of the year still remains to be seen.

However, Fernandez is skeptical that this serves as an indicator for weakened earnings expectations in the coming months.

“I'm not so sure [the decline in sales will weigh down earnings expectations],” Fernandez said. “And I think some of the reason that we saw online sales down year-over-year is because last year people were not going out to the stores to the extent that they are this year. So the online sales I can kind of understand.”

She also believes that, because consumers may have begun their holiday shopping earlier this year, in-store foot traffic numbers were stunted. Black Friday weekend shopper traffic for 2021 saw an increase of 34.2% compared to 2020.

“So I think, perhaps, some of that was pulled forward in those really strong retail sales we saw in the last six weeks, and we didn't see it as much now,” Fernandez said. “But we had strong momentum in the beginning of the fourth quarter. And I think the strength of the consumer is going to hold that up through the end of this year, even if the couple shopping days that we traditionally see were not quite as strong.”

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV

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