Robert Doll, BlackRock’s global chief stock investment officer, says stocks will correct before resuming their rally.
The Standard & Poor’s 500 Index has soared 36 percent from its March 9 low of 667. Doll says it could drop as much as 100 points, or 11 percent.
Then he sees a rally up to 1,000 by year-end, 11 percent above Tuesday’s close of 904.
“The more they’ve gone up, the more vulnerable they are to a correction,” Doll told Bloomberg.
“They’ve been non-stop up for the last bunch of weeks as if all problems got solved, but they are not all solved.”
Doll sees financial shares leading the correction. Stress test results from the country’s largest 19 banks will put pressure on those stocks, he says.
There’s “uncertainty regarding the capital raising that will take place” and how banks will get rid of their soured assets, he says.
Doll sees the stock rally resuming as the recession fades to the “rear-view mirror.” Earnings gains will fuel the rally, he says.
“The most negative of the observers will probably have to raise their [profit] numbers,” he explains. “That’s part of what’s woken the market up.”
Doll recommends the stock of energy, health-care and technology companies.
He’s not the only stock bull.
“The fear has shifted from being in [the market] to being out,” Frederic Dickson, chief market strategist at D.A. Davidson tells The New York Times.
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