Why BlackRock's Rick Rieder Believes Markets Will Rise Despite Valuation Worries

Despite ongoing market fluctuations, Rick Rieder, the global CIO of fixed income at BlackRock, has expressed confidence in the continued rise of stock markets, even in the face of high valuations. His insights were shared during a Yahoo Finance conference, where he highlighted the absence of sellers as a crucial factor supporting this trend.

What Happened: Rieder emphasized that despite the allure of money-market funds due to high interest rates, the momentum in stock buying remains robust. He noted that consistent inflows into equities from 401(k)s and other sources continue without significant selling pressure, Business Insider reported on Tuesday.

Corporate buybacks are also playing a pivotal role. Rieder pointed out that major companies have repurchased a trillion dollars worth of their own shares, reducing the equity supply and boosting per-share values. This activity, he argued, more than compensates for any valuation concerns.

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While acknowledging stretched valuations, Rieder suggested that market multiples could normalize if earnings rise significantly.

“I think markets tend to react to the shark closest to the boat,” Rieder said, adding that these are not immediate threats.

“I don’t know if it’s the latter part of 2025 or the beginning of 2026 unless they address the size of the spending dynamics, the amount of debt we’re issuing, and, then obviously, inflation relative to that.”

Why It Matters: The stock market has experienced a series of ups and downs recently. On Monday, U.S. stocks rebounded after a challenging week, with all 11 sectors of the S&P 500 trading positively. This recovery was driven by a decrease in pressures from the dollar and Treasury yields. Notably, consumer discretionary stocks outperformed, with Tesla Inc. TSLA surging by 7% due to reports of the incoming Donald Trump administration prioritizing a federal framework for autonomous vehicles.

However, geopolitical tensions have recently weighed on investor sentiment. Today, before the bell, futures of major indices pointed to a cautious stance on Wall Street, influenced by economic data and comments from Federal Reserve Chair Jerome Powell about the future of rate cuts, as well as geopolitical developments, including Russian President Vladimir Putin‘s expanded nuclear doctrine.

Price Action: In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 Index, fell 0.35% to $586.11 and the Invesco QQQ ETF QQQ, which tracks the Nasdaq 100 Index, declined 0.29% to $498.58, according to Benzinga Pro data.

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Image via Unsplash

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari