Oppenheimer said investors may want to use the recent pullback in higher-beta stocks to selectively add equity exposure rather than adopt a defensive stance.
The firm said recent market action reflects sector rotation within an ongoing bull market instead of broad-based selling. Oppenheimer added that participation has widened, with the percentage of Russell 3000 companies trading above their 200-day moving average rising to 68% from 60%, even as the broader market has remained largely flat since early June.
Oppenheimer said a decline in the S&P 500 below 7,420 could increase the likelihood of a correction toward 7,000 before a more durable bottom forms. The firm also said the recent pullback in AI-related stocks has occurred on lighter trading volume, suggesting the longer-term trend remains intact.
Across sectors, Oppenheimer identified Targa Resources (TRGP), Corteva (CTVA), W.W. Grainger (GWW), Amazon NASDAQ:AMZN, Archer-Daniels-Midland (ADM), Neurocrine Biosciences (NBIX), JPMorgan Chase (JPM), Welltower (WELL), Apple NASDAQ:AAPL, Alphabet NASDAQ:GOOG and Entergy (ETR) as preferred ideas. It paired those with sell recommendations on EQT (EQT), International Paper (IP), Uber Technologies NYSE:UBER, Home Depot (HD), PepsiCo NASDAQ:PEP, Danaher (DHR), Jack Henry & Associates (JKHY), Crown Castle (CCI), Fair Isaac (FICO), Walt Disney (DIS) and Constellation Energy (CEG).