Despite lofty valuations, the stock market is poised to keep climbing, according to BlackRock’s Global CIO of Fixed Income, Rick Rieder. Speaking at a Yahoo Finance conference, Rieder emphasized a critical factor fueling the upward momentum: a lack of sellers.
“If there’s no egregious piece of news—geopolitical or otherwise—the natural trajectory is toward higher prices,” Rieder stated, underscoring the resilience of equities even as valuations hover near historic highs.
The persistent influx of capital into the market plays a key role. Rieder highlighted how steady contributions from 401(k)s, personal wealth, and salaries flow into equities, maintaining buying pressure. Simultaneously, corporate stock buybacks are limiting the available supply. Companies have collectively repurchased $1 trillion of their shares, boosting per-share value by reducing the equity pool.
“You shrink the denominator because they’re buying back a bunch of their stock, and there’s no sellers,” Rieder explained, adding that this dynamic outweighs concerns about stretched valuations.
While Rieder acknowledged that valuation metrics like the S&P 500’s adjusted-earnings ratio are nearing generational peaks—one analysis even places it among the highest in the past century—he remains optimistic. He suggested that robust earnings growth could bring market multiples back to more reasonable levels over time.
“People, myself included, want the multiple lower,” he noted. “But it’s tough to see that happening without a significant catalyst to shift the current trajectory.”
While confident in the market’s near-term resilience, Rieder cautioned about longer-term risks tied to U.S. debt levels. He warned that rising government spending and debt issuance could become a destabilizing force, though this risk remains distant.
“Markets tend to react to the shark closest to the boat,” Rieder said. “The debt dynamic isn’t imminent—it’s not in January or February—but it could approach in late 2025 or early 2026 if fiscal policies don’t change.”
For now, Rieder predicts that absent a major disruptive event, the stock market will continue its upward migration, driven by strong demand and limited supply.
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