M&T's Wilmington Trust has officially changed its positioning to reflect a more favorable market environment for the first time since last February.
And, it happened just before Monday's monster surge.
"We have added to equities," the firm's head of investment strategist Meghan Shue told CNBC's "Trading Nation" as stocks were staging a record rally on optimistic vaccine news from Pfizer and BioNTech.
The decision came a session before the Dow hit all-time highs — which also hasn't happened since last February. The Dow rallied 834.57 points or 3% to close at 29,157.97 The S&P 500 saw a record day, too. It jumped 1.2% to close at 3,550.50.
'A pretty constructive backdrop for stocks'
"We do believe we have a pretty constructive backdrop for stocks when you think about the political set-up," she said. "More likely than not, [you're] looking at some degree of gridlock."
According to Shue, the firm shifted its diversified, multi-asset portfolio to a neutral overall risk from underweight. Within the portfolio, Shue's firm went slightly overweight in equities and moved to a slight underweight in high yield bonds.
"We actually like areas of U.S. large cap as well as emerging markets," the CNBC contributor said. "Within the U.S. large cap market, we are actually adding to value."
Shue, who oversees $124 billion in assets, prefers industrials that are influenced by technology, health care and off-price and online retail in the consumer discretionary space.
"We're being really careful and selective here — not going towards the most cyclical, the deepest value areas of the market," said Shue, who has a 6 to 12 month time horizon.
Federated Hermes also boosted its exposure to stocks last week. The firm's chief equity market strategist Phil Orlando told "Trading Nation" on Friday he was also "pretty comfortable" a blue wave was off the table and the outlook to control the pandemic.
As for Shue, she acknowledges Monday's vaccine news could be a game-changer, but she's not ready to do dive into stocks. She's predicting near-term choppiness due to uncertainty surrounding another coronavirus aid package, the state of the economy and January's run-off races in Georgia for two Senate seats.
"That could shift the make-up, and the market seems to be really liking a gridlock scenario right now," Shue said. "If we did end up getting a democratic majority in the senate, that might change some of the risk appetite."
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