A double-dip recession is unlikely, and stocks can rise if second-quarter earnings come in stronger than expected, says Robert Doll, chief equity strategist at BlackRock.
Economic growth slowed to 2.7 percent in the first quarter, and many experts expect another reading below 3 percent for the second quarter.
That’s not surprising, Doll told CNBC.
“After initial thrust off a recession low, you typically get a growth slowdown. And the debate that the market is facing right now is: Is this the typical growth slowdown or is the double-dip going to show up?”
He sees just a growth slowdown. “We’re recovering, but it’s a slow one,” Doll said.
“We’ve been in this 1,020 to 1,220 S&P 500 range for more than nine months, and I think we’re going to stay in there until we answer the question of a growth slowdown or a double-dip.”
Stocks can break above that range if corporate profits exceed forecasts, he says.
“It’s going to be tough to beat what we had in the first quarter, but if we can beat in the bottom and top line, I think we’ve got a shot at a trading rally for the summer."
Others worry that stocks will initially gain in reaction to strong earnings and will then fall back just like earlier this year.
“I’ve asked, how much more will this go up before we head down?” Randy Hare, portfolio manager at Huntington Funds, told The Wall Street Journal.
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