Never mind the market rout that played on Wednesday. Blackstone’s Byron Wien remains bullish on stocks, arguing that the S&P 500 index remains on track to hit 3,000 by year-end — a roughly 8% rise from current levels — despite putting in yesterday the broad-market benchmark’s worst session since February.
“I think we had to knock some of the complacency out of the market, and God knows, we are doing that right now,” Wien told CNBC during a late-morning interview.
“I think this is a correction in an ongoing bull market and I think the market goes higher at year-end,” Wien said.
Read: 5 questions worried Americans will ask after Dow slumps over 800 points
On Wednesday, both the Dow Jones Industrial Average DJIA, -0.74% and the S&P 500 SPX, -0.77% suffered their biggest one-day drop since February, while the Nasdaq Composite Index COMP, -0.12% had its biggest slump since June 2016. The decline took the major indexes below key levels.
Both the Dow and the S&P closed below their 50-day moving averages, a closely watched metric for short-term momentum trends. This was the first time both have ended below this level since July.
Still, Wien said a rally following the November midterm elections is likely “regardless of the outcome.” Midterm congressional elections on Nov. 6 could conceivably see Republicans lose control of the House and, though less likely, the Senate.
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“I’m pretty confident that the market will have a rally after the midterms, regardless of the outcome,” said the vice chairman of Blackstone Group L.P.’s BX, -0.23% Private Wealth Solutions unit.
That said, Wien believes that the 10-year Treasury note TMUBMUSD10Y, -0.03% will yield 3.5% but doesn’t believe that that level will further disrupt the market’s path to fresh records. Rising rates have been widely blamed for the recent equity-market selloff, because richer rates equate to higher borrowing costs for corporations. That dynamic can force investors to re-evaluate recent prices that have been paid for stocks.
In fact, Wien makes the case that Wednesday’s carnage sets the stage for the move higher, without which, further gains may not have been easily achieved.
“I don’t think [the stock market] was in a position to [rise further] until now.” We needed to “shake some of the complacency” out, he said.
Check out: MarketWatch’s snapshot of the market
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