The Nasdaq rebound can last less than a minute in New York.
Jeremy Siegel, professor of finance at Wharton School, sees short-term problems and says the backdrop dramatically supports re-opening of trade through big tech and growth games.
“I’ve been extremely optimistic here for nine months,” he told CNBC’s Trading Nation on Tuesday. “This stock market still has a way up.”
However, his forecast excludes the tech-heavy Nasdaq, which has just returned to positive territory for the year. The index rose 3.6% on Tuesday. Last week it was in the correction area.
Siegel warns of challenges related to higher interest rates and optimism about the economic reopening will continue to weigh on growth.
“I don’t think they’ll do badly. We won’t have a crash like we had 20 years ago,” he said. “But I think the outperformers are basically not going to be technicians for the next six to twelve months.”
In this environment, Siegel prefers groups that are positioned to benefit from rising interest rates.
“Value stocks are looked for by their return because I think the long bond rates will still be much higher here,” he added. “I don’t think we’re through with this rise in these long-term rates.”
Siegel reiterates his epic “bounce back” forecast for 2021. He still believes the Dow will hit 35,000 this year, up 10% from Tuesday’s record close.
“This will just be the hottest economy we’ve seen in a long time,” said Siegel.
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