JPMorgan's Kolanovic says buy more stocks on vaccine news, market will look past latest Covid surge

Published Fri, Nov 13 20207:48 AM ESTUpdated Fri, Nov 13 202010:14 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

(This story is for CNBC Pro subscribers only). JPMorgan's top-rated equity strategist Marko Kolanovic said Friday that the positive news about Pfizer's vaccine candidate was a "game-changer" that could help the market jump more than 10% in the next few months. Kolanovic, the bank's head of macro quantitative and derivatives strategy, said in a note that the expected vaccine should spur investors to look through the rising Covid-19 cases this winter and focus on the economic recovery ahead. "We further increase our [overweight] in Equities, and maintain OWs in Credit and Commodities vs. an [underweight] in Government Bonds and Cash. The arrival of a vaccine should drive long-term outperformance of Value assets, as the market looks ahead to price in a broader reopening of the economy," the note said. The S & P 500 and Dow Jones Industrial Average rose sharply on Monday after Pfizer and BioNTech announced that their vaccine candidate appeared to be more than 90% effective in a phase-three trial . That surge has been whittled down since then, with the S & P 500 up less than 1% for the week as of Thursday's closing bell. Kolanovic said the market should soon climb again, with the S & P 500 set to rise 13% by early 2021. "We see the S & P 500 surpassing our price target of 3,600 before year-end and reaching 4,000 by early next year, with good potential for the market to move even higher (~4,500) by the end of next year," the note said. Kolanovic, who was one of the few Wall Street strategists to call the market's bottom in March, was already bullish on the U.S. political situation after last week's election. He called the possibility of a divided government " the best of both worlds ." NBC News has called the presidential race for Joe Biden, though undecided Senate seats in Georgia could determine which party controls that chamber of Congress. The strategist also said the new economic restrictions in Europe to slow the spread of the coronavirus were focused on the service sector and should have little ripple effect through the global economy. Kolanovic said his team is overweight on cyclical and value stocks, as well as non-U.S. equities, and underweight on tech and momentum names. "The equity market is facing one of the best backdrops for sustained gains in years," the note said.

People walk past the New York Stock Exchange in the Manhattan borough of New York, November 10, 2020.

Carlo Allegri | Reuters

(This story is for CNBC Pro subscribers only).

JPMorgan's top-rated equity strategist Marko Kolanovic said Friday that the positive news about Pfizer's vaccine candidate was a "game-changer" that could help the market jump more than 10% in the next few months.

Kolanovic, the bank's head of macro quantitative and derivatives strategy, said in a note that the expected vaccine should spur investors to look through the rising Covid-19 cases this winter and focus on the economic recovery ahead.