Stocks stalled last week after their post-election pop, but strategists including BlackRock’s Rick Rieder and Oppenheimer’s John Stoltzfus are still longer-term bulls.
“There are no natural sellers,” Rieder said at the recent Yahoo Finance Invest conference. He is the chief investment officer of fixed income at the asset management giant, and his job also includes overseeing $150 billion in equities.
Rieder said there are two forces supporting stocks.
First, revenues are growing. “I think the multiples are high. But if you think the E in PE [price-earnings ratio] is significantly higher, then you get that multiple at a reasonable level.”
Second, “Technical conditions are crazy about stocks,” Rieder said. That’s partly due to the lack of sellers, as the sheer amount of dollars in 401(k)s allocated to stocks, plus companies buying back their own stock, creates a lot of buyers.
As for Stoltzfus, the chief investment strategist at Oppenheimer Asset Management, he just raised his year-end 2024 target for the S&P 500 (^GSPC) for the third time. He was one of the most bullish strategists on the street entering the year, and he now sees the index closing at 6,200. (He has yet to determine his 2025 prediction).
Stoltzfus told Yahoo Finance in an interview that stocks, the economy and business growth continue to defy expectations.
“Earnings and revenue growth in the second and third quarters have outperformed consensus expectations,” he said. ‘We were looking for much less growth. And then the Fed has been remarkably successful [at averting a recession]. Consumers and employment have all proven resilient, even if some of the slowdown is due to the fallout from the Fed chasing inflation for more than two, two and a half years.”
Of course, this does not even take into account the fiscal policy of the new Trump administration, which many strategists expect will further stimulate growth. One of them is Ed Yardeni, who recently set a target of 7,000 for the S&P 500 by the end of 2025 and said the election had reignited “animal spirits” in the market.
“I think we’re seeing a more pro-business government coming that will undoubtedly cut taxes,” Yardeni said in an interview with Yahoo Finance. “And not only for companies, but also for individuals. Many different types of tax cuts have been discussed, as well as a lot of deregulation. That’s why we’re increasing our estimates of what profit margins will do in the coming years.”
Rieder and Stoltzfus agree that a distant potential risk to stocks and the broader economy could be the U.S. deficit and debt ballooning, and a possible resulting buyer’s strike in the Treasury market that would push yields higher. can increase.
However, the markets are not worried at the moment.
“I think markets tend to respond to the shark closest to the boat,” Rieder says. “The shark on debt dynamics will not be off the boat in January or February, but it will be off the boat at some point. I don’t know if it will be late 2025 or early 2026 unless they address the magnitude of the spending momentum, the amount of debt we’re issuing, and of course inflation relative to that.”
Last week it appeared that the euphoria was tempered, but perhaps not eliminated. The S&P 500 had its worst week since September, falling 2.1%. That also means the price closed 2.1% below the record high of 6,001.35, a level that could quickly be surpassed if the “animal spirits” Yardeni invoked reassert themselves.
Julie Hyman is the co-host of Market domination on Yahoo Finance. You can find her on social media @juleshyman.
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