Equities markets that have jumped 12.7 percent in 2012 are poised to gain at least another 10 percent before year’s end as the global financial crisis subsides, according to BlackRock Inc. (BLK)’s Bob Doll.
“Equities will pause here for a bit as we consolidate the good gains,” Doll, chief equity strategist at BlackRock in New Jersey, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “If Europe stays off the front page and the Middle East behaves itself, we could see another double-digit percentage gain between here and the end of the year.”
The Standard & Poor’s 500 Index (SPX) added 0.9 percent at 12:56 a.m. in New York, advancing to the highest level since May 2008. The benchmark 10-year note fell, pushing the yield higher five basis points, or 0.05 percentage point, to 2.28 percent, up more than 0.4 percent this year.
Doll advised investors to move their money out of Treasuries and into equities, while making sure to maintain exposure to U.S. companies and focus on dividends. He said the U.S. is the only major economy in the world that will have stronger economic growth in 2012 than it had in 2011.
The U.S. gross domestic product is forecast to grow 2.2 percent this year, compared with 1.7 percent last year, according to data compiled by Bloomberg. The euro region is scheduled to contract 0.4 percent after growing 1.4 percent in 2011, while China’s economy will grow 8.3 percent after expansion of more than 9 percent last year.
“Economic growth is acceptable,” he said. “Not exceptional, but acceptable.”
A part of the strength in equities can be attributed to stimulative monetary policy across the globe, according to Doll. The Federal Reserve has held the federal funds rate at a range of zero to 0.25 percent since December 2008 and has pledged to keep it unchanged until the end of 2014.
“The central banks, and not just ours but all around the world, have given incredible support to the environment,” he said. “If the Fed or other central banks begin to be more restrictive, it will be because the economy is good.”
The Fed Chairman Ben S. Bernanke said that accommodative monetary policy is still needed to reduce U.S. unemployment in a speech today in Arlington, Virginia, increasing speculation of a third round of economic stimulus, or quantitative easing.
“What Bernanke is saying is that quantitative easing is there if we need it,” Doll said. “I think he will constantly talk about it to reassure markets.”
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