BlackRock’s bond chief explains why stocks will keep charging higher despite stretched valuations

Even with stock-market valuations hovering near generational highs, BlackRock’s bond chief highlighted one key reason why stocks can continue higher.

“There’s no sellers,” Rick Rieder — the firm’s global CIO of fixed income — said at a Yahoo Finance conference.

On the buying side, momentum is abundant, even as the prospect of persistently high interest rates boosts the appeal of the money-market funds.

“You think about the amount of money that comes into 401(k)s, wealth, salary — X percent goes into equities, and there’s no sellers,” he said.

Rieder added that corporate buybacks are also backstopping stock market prices. Big companies have bought a trillion dollars worth of their own shares, he noted, shrinking the equity supply and pushing per-share values higher.

“So you shrink the denominator because they’re buying back a bunch of their stock, and there’s no sellers,” Rieder said.

He sees this more than offsetting any valuation pressures, even with one S&P 500 adjusted-earnings ratio close to the highest it’s been in the last century, according to new research from Deutsche Bank.

And although Rieder sees current valuations as stretched, he added that market multiples could return to reasonable levels if earnings rise significantly higher.

“People want — myself included — want the multiple lower. But boy, it’s pretty hard,” he said. “If there’s no egregious piece of news, geopolitical, et cetera, the natural migration is to higher prices.”

To be sure, Rieder himself has previously noted impending risks, previously forecasting that US debt could lead to a market shakeup. But this won’t be an immediate threat.

“I think markets tend to react to the shark closest to the boat,” Rieder said last week. “The shark on the debt dynamic is not going to be next to the boat in January or February, but it is going to get next to the boat sometime. I don’t know if it’s the latter part of 2025 or the beginning of 2026 unless they address the size of the spending dynamics, the amount of debt we’re issuing, and, then obviously, inflation relative to that.”