BlackRock: Economic cycle can continue, but that might not help stocks much

In light of recent U.S. economic data, BlackRock has greater confidence the business cycle can continue, but stocks may struggle to grind higher, the firm's global chief investment strategist said Tuesday.

Richard Turnill said U.S. economic growth appears set to remain slow but robust, but investors must question whether the bulk of returns for equities are already baked into current stock prices.

The S&P 500 has rallied from its Feb. 11 low of 1,810 to top 2,070, but the index remains down nearly 2.5 percent over the past 12 months.

"You've got to bear in mind that we're into the seventh year of the economic expansion now, that equity markets have rallied a long way," he told CNBC's "Squawk on the Street."

"So when you think about what the future holds, you've really got to bear in mind that you're starting from a higher level of valuation, you're at an advanced stage in the cycle and there are material risks out there," Turnill said.

The stock market has started to price in the reduced risk of recession, but valuations look demanding, an interest rate hike is now in play, and there are a number of risks on the horizon, including Britain's referendum on its European Union membership, he said.

In BlackRock's view, there are no indicators that suggest the cycle is nearing its end, and it would take some sort of shock to derail it, Turnill said. The few signs that the cycle is aging — such as higher credit delinquencies and default rates — are flashing amber rather than red, he said.

"When I look at this rally we've seen since February, that's really not been about the market pricing in a great economic outcome. It's really about the market becoming much less concerned about a number of risks" including low oil prices, China's economic growth rate and the chance of recession, he said.