It’s been a tough week for the bulls as the Dow has had its worst two-day drop since June — and headed for its worst 3-day drop in nearly a year — and the S&P had its worst one-day drop since October. Are the markets headed for a correction? Joe Battipaglia, private client market strategist at Stifel Nicolaus, shared his insights.
“The central issue is whether or not you have a robust economic expansion from here or something that’s mediocre,” Battapaglia told CNBC.
“And at the same time, analysts in prior quarters who were pessimistic on earnings have gotten emboldened and have too much built into their expectations.”
Battipaglia said he expects the economy to “simmer down” to a much slower growth rate in 2010. He added there will be no V-shape recovery, and earnings will not meet analysts' full expectation for the rest of the year.
“And that’s why stocks tend to move sideways when those kinds of uncertainties surface,” he said.
Meanwhile, Battipaglia said he has scaled back his exposure to bank stocks.
“[Instead,] we put more money to work in health care because the government has moved away from the public option, and now you’ve got a better landscape to make choices,” he said.
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No immediate information was available for Battipaglia or his firm.