BlackRock’s Rick Rieder thinks Wall Street can finish the year on a high note, telling CNBC on Tuesday he sees upside remaining for the stock market.
Rieder’s comments on “Halftime Report” came as the S&P 500 traded up about 30 points, or 0.68%, on Tuesday’s session to around 4,516. The broad equity index is up about 20% year to date.
“Could you get another 5 to 8% out of the market? I think so. I don’t see any reason why not,” said Rieder, who’s the head of BlackRock’s Global Allocation Investment Team. He’s also chief investment officer of global fixed income at the world’s largest asset management firm.
“I think tech’s got some more upside to it that could even be more significant. I definitely think you can get another 5% to 8%, maybe even 10%. … The amount of liquidity in the system is epic.”
Market could still go higher on valuations, says BlackRock’s Rick Rieder
The Federal Reserve may start reducing its amount of monthly asset purchases as soon as mid-November, but Rieder suggested that’s not a major negative for the equity market.
“Even if the Fed tapers, they’re not reducing the size of their balance sheet. They’re just slowing down how much they’re putting in,” Rieder said. “I think there’s a lot of flows. I mean, look at the size of money market funds today. Where are they going to go? And the pension funds and endowments? Boy, I still think you got some ups here.”
To be sure, Rieder said he believes certain parts of the stock market are more attractive than other, but he stressed he sees opportunity nonetheless.
“When I look around, there are still a lot of stocks to buy that make sense. I was actually looking at the auto companies the other day. Boy, they’re pretty reasonable relative to where they’ve been over time,” Rieder said. “There are enough stocks out there that have reasonable valuations, yeah, I think we’re going to keep going higher” in the overall market.
Inflation has been a big story on Wall Street for months, and it remains in focus as earnings season picks up steam and corporate management teams discuss results and their business outlooks.
Rieder said he thinks people “underestimate” the ability for the market to handle price pressures.
“We’re doing a big analysis on this for a call I’m doing in a couple days. When you get this sort of inflation … impact on the equity market, stocks do pretty well” if companies are able to pass through increases to consumers, Rieder said. “I would argue, given the demand function, you can. So, I think the earnings numbers are durable. I think we’ve got upside still to go.”