'Don't count out technology,' even as value stocks start to stage a comeback, says Oppenheimer's strategy chief

• With positive COVID-19 vaccine news lifting value stocks related to the reopening trade, technology stocks have underperformed.
• In fact, since September 23, value stocks have outperformed growth stocks across all market cap segments, according to a Monday note from Oppenheimer.
• Technology investors should stay calm, as the underperformance of growth stocks over the past couple months likely has to do with a potential tax-hike under a Biden administration, the note said.
• "Interest rates are likely to remain low for the intermediate term suggesting that growth will retain its attraction for investors," Oppenheimer's Chief Investment Strategist John Stoltzfus said.
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Value stocks have staged a comeback over the past two months as investors bet that beaten down cyclical shares will surge on an economic reopening.

The outperformance in value stocks relative to growth stocks has become more pronounced over the past week, with stay at home stocks faltering and travel stocks surging on news of successful COVID-19 vaccine data from Pfizer and Moderna.

Since September 23 and through November 13, value stocks returned 13.5%, versus growth stocks returning only 9.8%, according to data from Oppenheimer.

This represents a "broadening in investor appetite for stocks" rather than a "longer-term change in market leadership," John Stoltzfus, the chief investment strategist at Oppenheimer, said in a note on Monday.

Weakness in technology stocks will be short lived as much of it is due to investors taking profits ahead of an anticipated capital gains tax-hike implemented by President-elect Joe Biden and his administration, Stoltzfus said.

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Long-term momentum in technology stocks is not running out of steam just yet, according to Stoltzfus.

What gives confidence in Stoltzfus' thinking is that the "ubiquitous nature" of technology is now intertwined with broad segments of the global economy, the note said.

All 11 sectors are poised to continue to benefit from efficiencies realized by technological innovation, and consumers' relationships with technology will only strengthen as 5G connectivity becomes more wide spread and thanks to the increased use of technology while working from home.

Finally, low interest rates will continue to be supportive of the growth trade, as investors are more willing to pay up for growth when it's scarce.

"Interest rates are likely to remain low for the intermediate term suggesting that growth will retain its attraction for investors," Stoltzfus said.

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