Stocks could post double-digit returns in 2011 for the third straight year and outdo global markets, said Bob Doll, chief equity strategist at BlackRock Inc.
Doll said the S&P 500 index .SPX should rise to at least 1,350 by the end of 2011, implying a 7.4 percent move in the U.S. index, calling that figure "a floor" for their target. He forecast improved growth, bolstered by falling unemployment and strong earnings for more gains in stocks.
Doll, a senior managing director at BlackRock who oversees more than $300 billion as part of BlackRock's $3.45 trillion in assets under management, said the U.S. will outperform the MSCI World Index, as it did in 2010.
The United States should benefit from more fiscal and monetary stimulus, a more innovative economy and better earnings growth prospects, all of which should help U.S. stock market performance, Doll said at BlackRock's office.
The strength of the market should accelerate a developing shift once again to equity funds by retail investors and away from fixed income.
"Equities are likely to take over from fixed income as the preferred asset class," he said.
Doll said the energy sector could be the top industry pick, followed by technology stocks, while financials were his least favorite sector.
"My concern is where is the revenue going to come from" for financial sector companies, he said.
Doll said earnings should rise to an all-time high, surpassing the $91.47 per-share record for the S&P reached in 2007.
Doll has been with the firm since 1999, including his years with Merrill Lynch Investment Managers, which merged with BlackRock in 2006.
Credit problems remain a concern, and high commodities prices could pressure profit margins, he said.
"What's the dark side look like? Credit is still an issue," particularly in the U.S. housing market, sovereign debt markets in Europe and U.S. state and local municipalities, he said.
Commodity price increases and inflation fears also could derail a slow U.S. recovery, he said.
Among other predictions for 2011, Doll said that stocks will outperform bonds and cash; that the United States, Germany and Brazil will outperform Japan, Spain and China; and that the U.S. economy will create as many as 3 million jobs in 2011 as unemployment falls to 9 percent.
"The removal of the Bush tax cut uncertainties and the fears of a double-dip recession as well as improved confidence will lead to more hiring," Doll said.
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