Stocks climbed Wednesday after a report showed new-home sales rose more than expected. Rod Smyth, chief investment strategist at Riverfront Investment Group, and Fritz Meyer, senior market strategist at Invesco AIM, discussed their market outlooks.
“This is an economy that’s not great for Main Street because it’s not creating jobs, but it’s wonderful for Wall Street, because while we have no V-shape recovery in the economy, we have a V-shape recovery in profits,” Smyth told CNBC.
“In all likelihood, the earnings for the S&P are going to be somewhere between $70 to $80 next year," he said.
"Put a 15 multiple on that, which is long run average and way below the level of the last 10 years. And you get a 1,050 to 1,200 trading range.”
Smyth said while the U.S. may not be experiencing a V-shaped economic recovery, many countries besides the developing ones are starting to think of raising rates.
In the meantime, Meyer said the fundamentals do justify a higher stock market and he believes that the economic recovery will be gradual.
“I would not want to see a second stimulus,” he said. “The economy on its own has always recovered based on pent-up demand and that’s what we’re seeing—we’re seeing improvement in retail data.”
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No immediate information was available for Meyer or Smyth.