Nuveen's Bob Doll: Bull Stock Market Still Has Legs

The stock market is vulnerable to a correction — and may already be in one — but more gains are in store before year-end, says Bob Doll, chief equity strategist at Nuveen Asset Management.

He predicts the S&P 500 will end the year at 1,996. That represents an 8 percent increase from last year's close.

"That will be a pretty good year," Doll tells Yahoo.

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Strong earnings will fuel the gains. "The second quarter is a great down payment," he adds.

"The fact that 75 percent of companies reported better-than-expected earnings, and the average positive surprise was 5 percentage points, and two-thirds of companies reported [a positive] revenue surprise" are plus signs for the market, he explains.

Doll predicts the second half of the year will "be a bumpier ride, which is more typical. Geopolitics, concerns about the fed — when do they finish tapering, when do they begin to normalize rates — these are all new uncharted waters that the market has to navigate."

In addition, he states, "If you look at the third quarter in mid-term election years [the market usually] is sloppy. The fourth quarter typically has a nice rally after the election."

Any correction would likely be similar to the 7 percent slide in January and the 5 percent dip in April, he notes.

The S&P 500 dropped 4.3 percent from its record high of July 24 to its low last Thursday, but has since rebounded 2.2 percent.

Bank of America Merrill Lynch strategists also are optimistic on stocks. In a commentary obtained by MarketWatch, they identify several positive factors for the market.

First, global liquidity is abundant. Corporations have plenty of cash to spend. Second, corporate earnings are strong — both profits and revenue.

Third, valuations are attractive, with the S&P 500 trading at about 15 times forward earnings, close to its historical average. And fourth, Wall Street analysts are highly bearish, a bullish sign.

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