Oil is a sideshow to equities as tech remains the fundamental driver, says Raymond James' Larry Adam

Summary

Larry Adam, CIO of Raymond James, argues that oil is a sideshow for equity markets and that technology remains the fundamental driver. He expects Middle East tensions to de-escalate, pushing crude oil toward $75/bbl by year-end. He maintains his S&P 500 target of 7,650, although he advises near-term caution. Technology sector corrections are normal and historically rewarding for patient investors.

• Oil is a sideshow; technology and communication services (50% of the S&P 500) are the fundamental market driver.
• Tech sector recently entered a correction (down >10%), a pattern seen six times in this bull market while still delivering double the S&P 500 return.
• Base case for the Middle East is de-escalation and a deal, leading to energy prices near $75/bbl by year-end.
• Increased non-OPEC production and SPR draws are helping to keep oil prices contained.
• Year-end S&P 500 target remains 7,650, though near-term caution is warranted.
• Investors should not make tech sell decisions during non-earnings periods; corrections have rewarded commitment.