Wharton’s Jeremy Siegel says fresh Covid fears are not enough to derail this bull market

Published Mon, Jul 19 20214:21 PM EDTUpdated Mon, Jul 19 20214:49 PM EDT

Wharton School finance professor Jeremy Siegel told CNBC on Monday he believes the latest round of coronavirus concerns to slam stocks is not enough to derail the bull market. Siegel's comments on "Closing Bell" came near the end of a rough session on Wall Street, in which the Dow Jones Industrial Average lost 725.81 points, or 2.09%, and the broad S & P 500 sank 1.59%. The tech-heavy Nasdaq declined 1.06%. Among the biggest losers Monday were stocks that are hurt by a hiccup to the pandemic recovery, such as airlines. Investors are assessing a rise in new infections associated with the highly transmissible delta variant and its implications for global economic growth. "I still think the bull market is not over. We may have a few more percent to go [to the downside]," Siegel said. However, he said the Federal Reserve's monetary policy remains highly accommodative, even if the central bank decides reduce the amount of asset purchases in the months ahead. "I don't think tapering is off the table, because I think the inflation news is not going to be good in the next two to three months, but nonetheless, with all that money out there, all that support back there .. I think that the push there is favorable for equities," Siegel said. The potential for further fiscal spending by year-end — whether it's through the bipartisan infrastructure package or another piece of legislation — also is supportive, he added. "I do not think that we're at the start of another bear market or even a correction, which of course would be a 10% decline in the [S & P 500]," said Siegel, a longtime bull who authored the famed investing book, "Stocks for the Long Run." Crucial to understanding Siegel's outlook on Monday's sell-off and potential market risks is his view on the delta variant in the U.S. Even though the country is seeing an uptick in coronavirus cases, Siegel said he expects the market to start looking past it because, he believes, investors will come to view this rise in infections as the last major one of the pandemic in America. He acknowledged the international outlook, particularly in developing nations where vaccine availability is a challenge, is less positive. It might take a month or two before the latest rise in U.S. Covid cases turns the corner, Siegel said, but he predicted it won't take the stock market that long to bet on a rosier situation. "Of course, when we talk about normal life, I think Covid changed everything in terms of the workplace and a lot of other things. But in terms of being able to do the activities, I think the market is forward-looking and will see through it relatively soon," Siegel said.

Jeremy Siegel

David Orrell | CNBC

Wharton School finance professor Jeremy Siegel told CNBC on Monday he believes the latest round of coronavirus concerns to slam stocks is not enough to derail the bull market.