The S&P 500 has wiped out the 10 percent correction it suffered from Sept. 19 to Oct. 15, hitting a new high Tuesday. And volatility has calmed greatly after surging to two-year high last month.
But don't get too comfortable, says Dan Morris, global investment strategist for TIAA-CREF, which has $840 billion of assets under management.
The market's vulnerability could be exposed as the Federal Reserve ends its quantitative easing this month and interest rates move higher, he told CNBC/Yahoo Finance. "That’s going to be a bumpy transition," Morris said.
"We should kind of enjoy this relative low-volatility, rising environment. But appreciate that we’re more likely than not to get another bout of volatility like we had recently as the market starts focusing again on rising interest rates in the U.S."
Most economists look for the Fed to begin raising rates around the middle of next year.
At this point, Morris believes foreign stocks, particularly in Japan and emerging Asian markets, offer better value than their U.S. counterparts.
The S&P 500 index carried a trailing price-earnings ratio of 19.27 Friday, up from 18.85 a year ago, according to Birinyi Associates.
Many investors are cautiously bullish on U.S. stocks now. "No one would accuse the stock market of being screamingly attractive, but . . . if the economic trend continues, we should have better earnings going forward," Dan Greenhaus, chief strategist at BTIG brokerage, told The Wall Street Journal.
U.S. third-quarter GDP growth was revised up to 3.9 percent Tuesday from 3.5 percent previously.
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