NOTE: The following was written by Yahoo Finance Contributor Milanee Kapadia. You can follow her on Twitter @MilaneeKapadia
The S&P 500 hit a record of 1,987.98 on July 24 but since then has dropped 2.6% on concerns that conflicts overseas could slow economic growth. It finished Tuesday at 1,933. But Bob Doll, chief equity strategist at Nuveen Capital Management says he firmly believes the broader market index will come within striking distance of 2,000 by the end of this year and companies will produce the kind of earnings to back that prediction up.
“The second quarter, as you point out, is a great down payment. The fact that 75% of companies reported better than expected earnings and the average positive surprise was five percentage points, and two-thirds of companies reported revenue surprise,” he says, adding that the third quarter could look choppy as the mid-term elections are coming up.
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Corrections are the normal course of bull markets but Doll is predicting a mild, shorter-term one, similar to the 7% and 5% dips we saw in January and April respectively. Playing into the second half, he expects more volatility saying, “it’ll be a bumpier ride which is more typical. Geopolitics, concerns about the fed -- when do they finish tapering, when do they begin to normalize rates -- these are all new uncharted waters that the market has to navigate.”
If a correction does occur, Doll says buy on the dips assuming earnings fundamentals stay solid.
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