Blackstone's Byron Wien sees 3 things keeping the stock market rally going in 2020

This article was originally published on this site

Blackstone Vice Chairman Byron Wien told CNBC on Wednesday that he believes the stock market will continue to rally this year with the support of three things — the “phase one” China trade deal, easing of U.S.-Iran hostilities and expectations for stronger corporate earnings.

The longtime market strategist said he’s sticking to his 3,500 year-end target for the S&P 500 that he put on his annual list of “Ten Surprises for 2020,” which was released last week. The S&P 500 at 3,500 would be 6.6% higher than Tuesday’s close.

In his “Ten Surprises,” Wien wrote that volatility will increase and there will be “several market corrections greater than 5% throughout the year.”

On “Squawk on the Street,” shortly before the U.S.-China signing of their initial trade deal, Wien said, “The phase one deal is without question a positive.”

However, he said he does not expect a “phase two” deal before this year’s November presidential election.

In the first-step agreement between the world’s two largest economies, China promises to purchase some $200 billion of American goods over two years and to make changes to its intellectual property and technology rules.

A deescalation of tensions between the U.S. and Iran is a second positive for Wall Street, Wien said. On Jan. 8, President Donald Trump’s statement that Iran “appears to be standing down,” after it had fired missiles at bases in Iraq housing U.S. troops, sent stocks higher. Tehran was retaliating for the U.S. killing of the top Iranian general at the Baghdad airport on Jan. 3.

As the third thing that traders are watching, Wien predicts that earnings being on track, or coming in better than expected, would boost the market.

So far, about 30 companies in the S&P 500 have released their quarterly results. And of those companies, 82% have posted better-than-expected profits, according to FactSet data. Among the companies beating profit estimates this week were J.P. Morgan Chase, Citigroup and Bank of America.

— CNBC’s Fred Imbert and Pippa Stevens contributed to this report.