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Markets' Path of Least Resistance? 'Higher,' Strategists Say

Thursday, 19 Apr 2007 | 11:32 AM ET

Where are U.S. markets headed if China cools down inflation? Art Hogan, managing director at Jefferies, and Sam Stovall, chief investment strategist at Standard & Poor's, gave "Morning Call" viewers their answer: "We go higher."

On Thursday, China's State Council announced that it'd take action on its boiling economy, which grew 11.1% in the first quarter -- with the highest inflation in two years.

China & the Markets
A look at how the markets are reacting to the surge in China's economy, with Arthur Hogan, Jefferies managing director; Sam Stovall, S&P chief investment strategist; and CNBC's Mark Haines

Stovall told CNBC's Mark Haines that investors were "surprised" by the Beijing news, but he believes "they remember what happened in February" -- and won't be scared off stocks this time. The strategist predicted the S&P 500's "old highs" could be "challenged" in the second quarter, saying, "We go higher."

Hogan's call was that the U.S. economy "shows more strength" in the first and second quarters than some analysts have estimated. He agreed that markets should be wary -- but believes they will follow "the path of least resistance: higher."