BlackRock Chief Investment Officer Rick Rieder believes the bull run in US stocks will continue, driven by higher earnings expectations.
In a new interview at the CNBC CEO Council Summit, Rieder say the market is in the midst of an “extraordinary period” where stock prices are rising while earnings multiples are falling.
While Rieder mentions some market risks, he says the earnings growth story is driving the market’s rise to new record levels.
“I don’t think we’ve ever seen anything like this in terms of a market doing extremely well. The money continues to flow into these markets. And the multiples, though, if you look at it relative to where you were, especially in the tech and semi-sector sectors, are actually lower than where we were if you go back to October.”
The earnings growth, I looked at the projected this morning [one-year forward] profit growth, talking about a profit growth of more than 20%. That’s incredible. So yes, there is a lot of uncertainty. Yes, there are things you should pay attention to. I’m concerned about crowds in different markets, not just the general markets, but also in single-name stocks, where you’re seeing more crowds and more momentum trading than I’ve ever seen before.”
BlackRock’s CIO says he is keeping a close eye on the Magnificent 7 names and insists their valuations are justified due to exceptional earnings growth.
“I was looking at the Mag 7. I mean, you’re talking about a 26x multiple for companies that are holding back 30%-40% earnings growth.
So yes, there is a lot of uncertainty. There is a huge amount of cash. There’s a huge amount, even with the IPO calendar, which is big. There are still a lot of buybacks going on. So I think the technical aspects are good. Listen, I think you should stay in it. And I think the stock market will probably continue to do well.”
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