Low gas prices to fuel year-end rally: Bespoke's Hickey

Falling gasoline prices are linked to a continued bull market in stocks, Paul Hickey, co-founder of Bespoke Investment Group, said Wednesday.

"What we did is we looked at this current bull market in equities, and when we saw a 10-percent decline in gas prices over a three-month period looked at how the market did," he said. "You would think that this was priced in, the market would rally as gas prices decline. But what we've seen is that we've continued to rally going forward."

On CNBC's "Halftime Report," Hickey said that the uptick had continued strength.

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"Three months later, each of the four times, the market was up by at least 8 percent," he said. "So, the market may be pricing it in a little bit here, but, I mean, we should rally going forward."

Hickey's S&P 500 year-end target is 1,825.

Strength of the U.S. dollar and talk of thawing tensions with Iran were helping to keep pressure on crude, Hickey said.

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"That's a negative for oil prices," he added.

Since the start of September, the national average price for a gallon of gas has declined more than 11 percent from $3.594 down to $3.186, Hickey noted. Prices at the pump are lower now than they have been at any other point since February 2011.

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The trend would likely benefit consumer discretionary stocks, technology and financials, he said.

"More money in consumers' pockets equals better performance of those stocks," Hickey added.

The equity market, which has been strong year to date, would likely continue to perform, he said, noting that historically, a 15 to 20 percent gain in the first 10 months of a given year leads to a strong final two months.

"History suggests that these strong markets continue being strong," Hickey said.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.