Wall Street's Byron Wien: The market is setting up for a post-midterm election rally

  • The two-day stock plunge is a buying opportunity before the market eventually rallies after the November midterms, Wien predicts.
  • "I think we had to knock some of the complacency out of the market. God knows we're doing that right now," he says.
  • Stocks were falling Thursday, a day after the major indexes suffered steep losses sparked by concerns about higher rates and a sell-off in tech shares.

The two-day stock plunge is a buying opportunity before the market eventually rallies after the midterm elections next month, Wall Street veteran Byron Wien predicted on Thursday.

"I think we had to knock some of the complacency out of the market. God knows we're doing that right now," Wien, a vice chairman at Blackstone, said in a "Squawk Alley" interview. "I think this is a correction in an ongoing bull market."

U.S. stocks were falling in volatile trading Thursday, a day after the major indexes suffered steep losses sparked by concerns about higher interest rates and a sell-off in tech shares. The Dow plunged nearly 832 points, or 3.15 percent, on Wednesday in its worst one-session decline since February.

But Wien sees the market drop as a opportunity to load up on equities, saying he likes the health care, biotechnology, and industrial sectors. He's also looking at large-cap tech stocks. "Some of them have been knocked down pretty hard and they have open-ended earnings."

Wien issued in January his annual list of market predictions for 2018. Following a banner 2017 for stocks, he warned at the time, correctly as it turns out, the market would experience a correction this year.

In a prediction that's yet to play out, he said at the time he sees Republicans losing both the House and Senate in the November midterm elections.

Wien began the predictions list in 1986, when he was chief U.S. investment strategist at Morgan Stanley.

On Thursday, Wien said he's concerned about rising rates, predicting the 10-year Treasury yield will reach 3.5 percent. He didn't give a timeline. But he argued the stock market "can continue to move forward on that basis."

Wien also reiterated his prediction that there won't be another recession until at least 2021.

— CNBC's Fred Imbert contributed to this report.