If a recession occurs in the U.S., it won't hit too hard, although the markets will continue to experience volatility stemming from a lack of confidence because of uncertainty in Europe and weak U.S. economic data, said Robert Doll, chief equity strategist for BlackRock.
Doll predicted that the S&P 500 could move anywhere in the range of 1,100 to 1,250. He pegged the chance of emerging on this range's upside at two-thirds, while dropping to hit the low side of the range at one-third.
The U.S.'s probability of falling into a recession depends on whether Europe can find solutions to its problems, Doll said. Possible solutions to turning the European solution around could include the lowering of rates by the European Central Bank or back-stopping the deposits of European banks, Doll said.
If a recession does occur, Doll thinks the index could fall as low as 1,010, although he does not think it will a very long downturn.
“If we have a recession, I think it’s a shallow one because the deep cyclical parts of our economy that take us down a lot are already in the basement—housing, autos, non-residential construction," Doll said. "We're not going to have huge drops in those, and they’re the things that take us down in a recession. If we have a recession, I think it’s a shallow one.”
Although recent economic data have been in the doldrums and the unemployment rate hovers at 9.1 percent, business is doing OK, Doll said. CEOs remain concerned about the future, the absence of political leadership and lack of confidence.
By looking to overseas markets, taking advantage of the weaker dollar and managing costs tightly, companies have been able to post positive earnings despite weak economic growth. In the first half of this year, real GDP was up 1 percent,while corporate earnings were up 17 percent.
"I'm glad I can invest in companies," Doll said. "I'm glad I don't have to invest in the economy."
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Disclosure information was not available for Robert Doll or BlackRock.