Market Rally Is Expected to Continue, Portfolio Managers Say

Jeff Layman, portfolio manager at BKD Wealth Advisors, told CNBC’s “Power Lunch” that he believes the current rally can be sustained.

“In our view, stocks are doing what they ought to be doing in an environment of record corporate profits, profits that continue to surprise to the upside,” Layman said Wednesday. “The S&P 500 is still a few percentage points away from getting back to the all-time high levels of March 2000 and over that time earnings have doubled. You’ve got lots of cash on corporate balance sheets, you’ve got a global economy that continues to move along real well. Money conditions are good. We suspect that we’ll see more record highs as the year progresses.”

Layman said he’s put new cash into the market now and likes the prospects for healthcare and finds technology stocks “interesting” with multiples in the upper teens.

David Reilly, director of portfolio strategy at Rydex Investments, was more cautious.

“Near term, I think we’re a little more cautious,” Reilly said. “Obviously, the market has moved very quickly and quite a distance in the month of April alone. It’s up about 5% so that’s most of the year’s gains in a single month. However, if you look at the fundamentals, still healthy corporate earnings growth and a slowing economy, which we think net-net is good for stocks at this juncture. Looking further out into the quarter and perhaps into the third quarter, you see stocks continue to post some gains. Those gains, in our view, will be largely a function of multiple expansion which hasn’t been present in the market. We think the key variable is interest rates being fairly benign.”