Tags: Dole | stock | market | PE

Nuveen's Doll: 'We Have More Turmoil to Go' in Stock Market

By    |   Tuesday, 07 October 2014 08:14 AM

Volatility has spiked higher, and stock prices have slid a bit since the S&P 500 and Dow Jones Industrial Average hit record highs Sept. 19.

Investors can expect more of the same for the time being, says Bob Doll, chief equity strategist for Nuveen Asset Management.

"The market got overbought," he tells CNBC.

"My guess is we have more short term turmoil to go, more probing to the downside. New highs would surprise me more than anything."

The S&P 500 closed at 1,928.21 Thursday, and the Dow closed at 16,659.25. The CBOE Volatility Index (VIX) has soared 25 percent since Sept. 19.

"I just think the market continues to consolidate," Doll said. And why won't it just keep rising?

"We've had a double-barreled market. We had earnings go up. We had P/E [the price-earnings ratio] go up," he explains.

"The Fed is no longer the catalyst for P/E going up. It's just earnings. Taking the Fed positive away leaves us with one barrel. That means smaller gains and more volatility.

"I'm not concerned with the Fed getting ahead of the curve. They're going to lag the curve. The Fed normalizing rates is not a negative for stocks, not a positive for bonds."

Meanwhile, Byron Wien, vice chairman of Blackstone Advisory Partners, is concerned about stock valuations.

"I look at trailing 12-month earnings, and on that basis bubbles occur at 25 to 30 times [earnings], some distance from the current level," Wien writes in a market commentary. The S&P 500 had a trailing P/E ratio of 18.8 Friday, according to Birinyi Associates.

But, "the valuation context could change if earnings fall short of estimates," Wien cautions. "Right now analysts seem to be stepping up their forecasts."

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Volatility has spiked higher, and stock prices have slid a bit since the S&P 500 and Dow Jones Industrial Average hit record highs Sept. 19.
Dole, stock, market, PE
287
2014-14-07
Tuesday, 07 October 2014 08:14 AM
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