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This ‘mini-correction’ is a buying opportunity: BlackRock strategist

  • The U.S. stock market may be coming off its worst day since last September, but the world's largest asset manager is giving investors a dose of optimism.
  • The negativity isn't convincing the firm to alter its asset allocation strategy — at least not yet.
  • Most investors are trying to focus on economic fundamentals, not all the noise coming from Washington, according to BlackRock's Terry Simpson.

The U.S. stock market may be coming off its worst day since September, but the world's largest asset manager is giving investors a dose of optimism.

"If we have mini-corrections like today [Wednesday], it could actually be a nice opportunity to put some capital to work," said Terry Simpson, multi-asset investment strategist at the BlackRock Investment Institute, Wednesday on CNBC's "Trading Nation."

The S&P 500 and Dow dropped by nearly 2 percent, while the Nasdaq fell by more than 2 ½ percent.

The declines came amid jitters over turmoil in Washington. NBC News confirmed Tuesday a report from The New York Times that former FBI Director James Comey put together a memo outlining a conversation in which President Donald Trump allegedly asked him to halt an investigation into Michael Flynn, the former national security advisor.

There's also growing concern that the latest developments could derail the president's pro-business tax cut and reform plans, and permanently take down the stock market rally.

Simpson isn't in that camp.

"This would be a dent in the legislative agenda. That would be somewhat troubling for a lot of investors who have been banking on fiscal stimulus as well as fiscal reform," he said. "At BlackRock, we always thought that would be part of this bonus for 2017. We weren't basing a lot of our portfolio decisions off of it."

The negativity isn't convincing the firm to alter its asset allocation strategy — at least not yet. It's waiting to see how the political turmoil and latest market decline evolve.

Meanwhile, Simpson is stressing that the U.S. economy's cyclical recovery is intact, and earnings are coming in strong.

For the latest quarter, so far 75 percent of companies have reported their earnings per share beat Wall Street estimates. That's up nearly 16 percent versus the same period last year.

"If we look at the markets in an aggregate perspective, within the last two days or two, markets were up positively. So, we think that was investors buying into this kind of synchronized improvement in the global growth story," Simpson said, noting that most investors are trying to focus on economic fundamentals, not all the noise coming from Washington.

— CNBC's Fred Imbert contributed to this story.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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