Jeremy Siegel Sees More Stock Gains Ahead

Even with pricey stock valuations and the market’s extended rally last week, Wharton School and WisdomTree economist Jeremy Siegel expects equities to move higher.

“Looking ahead, I see opportunity if the current (market) resilience continues. Stocks are not cheap by historical standards, but with the fear gauge elevated and investors still largely hedging their bets, we could see a sharp move higher if sentiment turns more positive,” Siegel said Monday in his weekly commentary.

“While the Fed’s gradual pace of rate cuts is not likely to spur a runaway rally, it should provide enough support to keep the market moving higher, especially if inflation continues to moderate and the labor market doesn’t show significant deterioration,” he wrote.

Last week saw a “notable surge in the stock market, pushing it to all-time highs, despite mixed economic data,” Siegel noted. Inflation figures, jobless claims and sentiment reports have been uneven, but markets remain resilient, with the Chicago Board Options Exchange’s Volatility Index, or VIX, hovering around 20, reflecting persistent investor fear, he said.

“The market’s strength at these VIX levels, with heightened hedging activity, suggests more room for upside if VIX recedes,” the economist predicted.