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Pros Say: Small Market Pullback — Then Rally Goes On

Stocks were mixed on Thursday—well off their lows for the day—as investors greeted a downturn in the markets with yet another round of buying. The market digested economic reports a bit better than expected as signs developed that the market was ready to take a breather from its violent five-month surge off the March lows. Read and listen to what the pros had to say...

Recovery Could be False Dawn

“The improvement in economic data feels like a real recovery, but some of it is just a bounce back from an absolute plunge," said said Tapan Datta from Hewitt Associates. "There are issues about final demand going forward to 2010.”

Oil Heading to $66

The price of oil is set to extend its recent slide toward $66 a barrel, said Clive Lambert, director at FuturesTechs. “The market’s struggling and we’re seeing some weakness coming in—we’re seeing that volatilities have tightened up in the last few weeks…and momentum is running out of steam to the upside,” Lambert said.

Market Dips are Buying Opportunities

Any dips in the stock market are buying opportunities, said Fredrik Nerbrand from HSBC Private Bank. Nerbrand said he doesn't see any evidence of a double-dip recession. “Very near term, there’s probably more consolidation to come,” he said. “[But] ultimately, with all the money being printed, it’s going to fuel asset prices than consumer prices, which leads us to be buyers of risk over the next 12 months.”

Stock Rally to Continue

"We’ve had a tremendous rally in the last 6 months…so I fully expect that a year from now, stocks will be higher," said Bernie McGinn of McGinn, McKean & O'Neill.

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“In the meantime, I wouldn’t be surprised to see a little bit of a pullback, but I think that we’re getting set up for a pretty continued constructive stock market.” McGinn said bad news from the government, such as state budgets, has the possibility to cause concern and pullbacks.

Deficit to Weigh on Markets For Years

The U.S. national deficit will continue to weigh on financial markets over the coming years, said Stuart Bennett at Calyon. “As soon as governments are confident that the recovery is in place they should start to pullback expenditure and reel in the deficit,” he said. “If they don’t do that, then the market will get very nervous.”

Stocks May Pare Gains

The rally has been "energized by some decent data," said Lars Meuller from Valoro Fondkommission but he has been skeptical of the market upturn and thinks the markets have run too far too fast. He doesn't see a "sharp correction downwards" but recognizes stocks will pare gains. “Fragility is still the underlying theme driven by inventory and policies,” he said.

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