Higher and higher? With the Dow and S&P 500 on record runs, money managers told CNBC on Wednesday where they think stocks will go from here.
To put this remarkable rally in perspective, the Dow traded below 13,000 in November. It gained 1,000 points by mid-January, another 1,000 by late March, and about 500 points since then.
So far this year, the blue-chip index has gained nearly 15 percent—more than twice its 7.3 percent gain for all of 2012. The S&P 500 has increased 14 percent this year—already above its gains for all of 2012.
Wednesday morning, market experts appeared on "Squawk Box" to offer their opinions on what's next for stocks:
Jeffrey Saut, chief investment strategist at Raymond James:
"The markets are floating up on a sea of liquidity and an improving economy." Saut also said he's committing new money at these levels.
"I think the markets will trade higher to the end of the quarter to 1,700 on the S&P 500," he continued, "and then in July and August, you are vulnerable to a double-digit decline. I quite frankly don't think it will be 20 percent. I think the economy is going to strengthen in the back half of this year."
"Once you get into July and August, out of the D.C. Beltway crowd you're going to start hearing about continuing resolutions and debt ceilings again. And that's going to stir up some fears."
Paul Schatz, market strategist and president at Heritage Capital:
"Earnings are not great. They're fine. Everything is OK. But I think we all know that without the Fed's massive, torrent of liquidity, the markets would be nowhere near 15,000."
The Federal Reserve could taper its $85 billion bond and mortgage-backed securities purchase program if the economy improves, but Schatz also said it could happen if the stock market gets a little out of control. "The Fed is working on this wealth-effect and clearly it's working, ... but if the Dow sees 15,500, 16,000, I think [Fed Chairman] Bernanke is going to tamper off or they'll float some trial balloons."
"As long as this rally lasts, you should still be with discretionary, still with staples, still with health care, still with things are dollar positive. I think the dollar is in a major long-term, secular bull market."
Paul Hickey, co-founder of Bespoke Investment Group:
"Long term this is a bull market. It's the fifth strongest and sixth longest of all-time," Hickey said. "We're steadily putting money to work."
"[But] in the very short term, we'd be maybe a little cautious. We have seasonality—eight out of the last 10 years the first half of May has been down. The market is overbought right now," he added.
"We've [also] seen increased supply coming into the market in the form of secondaries. The last two days, we've had $6.5 billion in equity offerings announced. And that's the highest since mid-December. So in the short term, maybe a 1 to 2 percent pullback, low single-digits."
David Spika, senior vice president and senior portfolio specialist at The Westwood Funds:
"In our mind, it's really tough not to be bullish today. Obviously what the Fed is doing here, what [the BOJ] is doing in Japan. They're forcing money into the equity market. The only place to get any real yield or return opportunity is in the equity market," Spika said.
"Consumers are benefiting from an improving market. You're seeing consumer confidence improving. The job market is slowing getting better. All of these things factor into creating an environment that, we think, fundamentally merits a continued move higher in the market."
"It's not a momentum-driven market," he continued. "There is still a lot of money on the sidelines. Hedge funds aren't fully invested. When you look at the performance of defensive [stocks] versus cyclicals, there's a lot of bearishness out there. All of this creates an opportunity to move higher."