Suffering one of the worst weeks of the year after the S&P 500 dropped nearly 5% last week, reeling markets could use some good news over the last couple of days of October.
U.S. stocks moved higher in early Monday trading — following last week's slump that pushed the S&P 500 into correction territory — and at least one market bull sees Monday's momentum carrying over at least through November and possibly longer.
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"It pays to be bullish long-term all the time in the stock market," Jeremy Siegel, Wharton School professor of finance told CNBC Monday. His belief in the health of the current market is fueled by historical precedent.
"In a way I say 'thank goodness October is nearly over,'" Sigel said. "I looked up the data, over the last 25 years, November is the second best month of the year (for stocks), just slightly behind April which is the first best month. So I do think we're going to have a year-end rally over here coming up."
Most market watchers are paying attention to the Federal Reserve's decision on whether to raise interest rates or not on Wednesday. The bond market is also under surveillance after the U.S. Treasury began the first of three auctions to sell $114 billion in new 2-year notes.
But Siegel doesn't expect much to happen during Wednesday's Fed meeting.
"The Fed is certainly not going to do anything on Wednesday and they're going to leave the door open (for more rate increases)... There's no docs this meeting, so we won't know what all of the FOMC members are going to be thinking," Sigel said.
The S&P 500 just entered correction territory last week as it gave up much of its recent gains to fall to 10% below its peak in July. The benchmark index is now just 15% off of its October 2022 low, which Sigel believes will hold as the market's lowest level ahead of the upcoming rally he is predicting.
"Returns in the market over the next one, two, five, 10 years are very good. If you can invest 15% off of a bear market low, which is what we had a year ago, your subsequent returns have exceeded the market by quite a margin."
Check out Sigel's full interview below:
"I do think we're going to have a year-end rally coming up. The Fed is not going to do anything on Wednesday and they're going to leave the door open," says Jeremy Siegel. "I think we're pretty near the top of the 10-year, maybe five and a quarter." pic.twitter.com/SwuHg3P69l
— Squawk Box (@SquawkCNBC) October 30, 2023
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