Nasdaq briefly breaks through 10,000 for first time

Opimas CEO Octavio Marenzi joins Yahoo Finance’s Heidi Chung to discuss his outlook on the latest market volatility.

Video Transcript

HEIDI CHUNG: I want to make more sense of these market moves by bringing in our next guest. Octavio Marenzi is CEO of Opimas. And Octavio, thank you for being here. But I want to get your thoughts here on what we're seeing in today's markets. Has the market maybe run too far, too fast? Do you think that this pullback that we are seeing today might be something more long term?

OCTAVIO MARENZI: Well, I think to call it a pullback is saying it a bit too strongly. I know the Dow was down about 200 points at one stage today. Unfortunately, by the standards of the past couple of months, that's a pretty tame day. So I think it's too soon to say that it's run ahead of it too fast.

I think what we have seen are a lot of technology stocks do really well, obviously, with the NASDAQ hitting new highs. And that's directly a consequence of all the money that the Fed has pumped into the system that really tends to favor technology stocks and sort of longer term prospects, where the growth has strong growth potential and the earnings look a few years down the road.

So that's why we've seen technology stocks do particularly well over the course of the past days, today, but the past few weeks as well. And that's likely to continue, I think, unless the Fed changes course quite dramatically tomorrow.

HEIDI CHUNG: Octavio, I like that you brought up large cap tech because like you mentioned, after the lows, the end of March, large cap tech had really been leading the market higher. But over the past few weeks, we are starting to see more breadth in the market, specifically value sectors catching a bid. Do you think we're going to see more of that going forward?

OCTAVIO MARENZI: Well, I think we're seeing a lot of liquidity come into the market now. And it's some of the lending programs that the Fed has put into place are just now starting to get going, really. So I think we're going to see a fairly broad based increase overall. So I think it's going to be broad based.

We're seeing funds basically flow into everywhere. And that's going to support the stocks for some time to come. So I think we're going to see this right across the board. It's going to be a pretty good period looking forward, until the Fed changes course at some stage.

HEIDI CHUNG: So a lot of retail investors participating in a lot of the market action lately, but again, a lot of money is still on the sidelines here. So breadth in the rally, we're seeing a lot of different sectors participate. Where do you think investors can jump in now to really catch up if they are feeling a bit of FOMO?

OCTAVIO MARENZI: Well, I think there's certain sectors have done really well just recently. So the airline sector has done surprisingly well and sort of started to bounce back. So that's an area I think worth looking at carefully. Some very large well-known investors seemed to have timed that completely wrong.

But if you look at sort of what's happened with the jobs update recently, the whole market looks to be recovering much more quickly than we anticipated. And I think the real thing to look at is, is that going to continue? Is that rally in employment going to continue? And which kind of stocks will it have an impact on?

So the stocks that took a beating were the retailers, were the airlines, were the cruise lines, and people like that. Those are the stocks where the big opportunities lie. But it all depends on how quickly that comes back.

If the indication is anything to go by the jobs report most recently, those sectors might well come back much, much more quickly than we had anticipated. They seem to be down for the countdown now when people talking about bankruptcies just looming around the corner. Those fears seem to be overblown, and it looks like sort of some real resilience in those sectors, much more than we anticipated.

HEIDI CHUNG: And earlier, you mentioned monetary policy. Of course, the FOMC kicking off its two-day meeting today. The Fed has been doing a lot to support the markets. We're going to get the latest monetary policy decision tomorrow. But a lot of folks aren't really expecting anything too different.

But we are getting an updated dot plot, as well as a summary of economic projections. I want to get your thoughts on what to expect tomorrow, and also what you expect from Fed chair Jerome Powell's presser afterwards

OCTAVIO MARENZI: Well, I think I expect absolutely nothing to come out of it, other than for them to say, we're going to carry on doing what we've been doing, and we're not going to change course. You say the Fed has been supporting the markets. I mean, basically, the Fed has been the only game in town. It's what's kept these markets up.

It's kind of difficult to understand why if you look on a one-year basis the NASDAQ is up 29%, or the Dow is up 6%, or the S&P 500 is up 12% on a year to year basis. We're going through the worst economy in living memory. The stocks should be way, way down. So what's obviously supporting the stocks is nothing other than the Fed's intervention and just the massive pumping of money into it.

And the Fed is acutely aware of that. They know that. And everyone is watching the Fed and is going to go sift through with a very, very fine comb to see what they've said and what they haven't said. So they're aware of that, and they're afraid of spooking the market. So they're going to be very, very cautious in any of their comments.

And they're basically only going to say we're going to continue these programs until the economy recovers. We're going to very, very low interest rates for an indeterminate amount of time. Anything else will scare the markets, and everyone will rush for the doors. And they know that, and they're very afraid of that.

HEIDI CHUNG: Great. Octavio Marenzi, CEO of Opimas, thank you so much for your insights.