US Markets

Brace for a 10-15% market correction this year, warns financial advisor

Key Points
  • United Capital CEO Joe Duran is sticking to his prediction of another correction for the S&P 500 before the end of the year.
  • He wants investors to make sure their portfolios are allocated properly.
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United Capital CEO Joe Duran is sticking to his prediction of another correction for the S&P 500 before the end of the year.

He believes that while the "micro story" for individual companies is good, the macro picture — like rising interest rates and a weak dollar — isn't so bullish.

"You should expect a 10 to 15 percent decline in the next nine months, from here to year-end and you should be allocated to protect yourself," he said Thursday on CNBC's "Power Lunch."

A trader rubs his face while working on the floor of the New York Stock Exchange in New York City.
Getty Images

That means making sure your portfolio is balanced appropriately for your risk level, Duran said.

The market has already had one correction earlier this year. On Feb. 8, the Dow Jones industrial average, and Nasdaq all closed about 10 percent below record highs set Jan 26. It was the first pullback of that magnitude since 2016.

Duran isn't alone in warning about another drop in equities.

In March, Allianz CEO Oliver Bate said he expects a "more severe correction over the medium to long term" thanks to high market valuations and jittery investors. And after the correction in February, Morgan Stanley strategist Andrew Sheets said it was just an "appetizer, not the main course."

Duran said market declines typically happen when rates are going up, which is what happened in February. The move higher caused investors to fear the possibility that inflation was rising faster than expected.

On Thursday, the 10-year Treasury note yield broke above 2.9 percent, which is around the same level that sparked the earlier correction.

The market closed lower Thursday, with the Dow down 83 points and the S&P 500 declining 0.6 percent. The Nasdaq dropped 0.8 percent.

— CNBC's Fred Imbert contributed to this report.