CFRA’s Stovall says S&P 500 can go higher, but expects correction

CFRA’s Sam Stovall anticipates the stock market can go higher even without rate cuts, but has the playbook to navigate a possible correction if one develops. The chief investment strategist expects the S & P 500 still has further upside. His 5,250 year-end target is roughly 2% above where the broad market index closed Wednesday, at 5160.54. But he sees a bumpy road ahead, anticipating a consolidation of about 8% to 10% after the market’s recent gains. “One of the reasons that the 10-year yield is creeping higher, that the Fed is going to take its time in a sense to be slower to lower interest rates, is because the economy is actually doing fairly well,” Stovall told CNBC’s ” Squawk on the Street ” on Thursday. “As a result, I think there is, after we get through this much-anticipated correction that history says is overdue, I think we do end up being higher by year-end,” Stovall said. The strategist made his remarks after Wednesday’s hotter-than-expected consumer inflation report for March spurred concern that the Federal Reserve will keep interest rates higher for longer, a headwind that could pressure equities after their rally this year. For investors, there are buying opportunities to help navigate the volatility. Historically speaking, in corrections going back to 1990, the three best-performing groups were gold, electric utilities and household product makers, Stovall said. The strategist recommended companies such as gold miner Newmont , utility NextEra Energy and Ivory soap maker Procter & Gamble . After such a pullback, however, the best-performing assets were in communication services, financials and technology, Stovall said. “Traditionally, we rotate back into those that were beaten up the most,” he said.