The stock market has been on autopilot in November, and it's not without rhyme or reason, said Rick Rieder, BlackRock's global fixed income CIO.
"I don't think equity valuations are that high when you look at free cash flow yields," said Rieder on Yahoo Finance Live. "And in the last couple of weeks some earnings are pretty impressive."
The market has liked that companies have been able to pass along inflation successfully to end users, as seen this week in earnings from big names like Walmart, Target and TJX Companies, Rieder added.
To that point, the numbers from third quarter earnings season continue to trend very favorably despite supply chain bottlenecks and hot inflation.
About 82% of S&P 500 companies have reported a positive earnings surprise for the third quarter, according to FactSet data. The blended earnings growth rate for the third quarter is tracking up 39.6%, which is on pace to be the quickest pace of expansion for S&P 500 companies since the second quarter of 2020.
As a result of favorable earnings trends, stocks have pushed even higher.
The S&P 500 closed at an all-time high for the 66th time this year on Thursday. Strong risk appetite for stocks has sent investors gobbling up buzzy startup companies (despite them losing money) in the hopes to make a fast buck, notably newly minted IPOs Sweetgreen and Rivian.
Meanwhile, big-cap tech plays, Apple, Microsoft and Google, touched fresh records Friday.
If consumers could continue to shake off inflation, the market is poised to march forward, pros say.
"No question there is inflation. Yes, the prices of stuff are going up. But you know, how long will the market continue to shake it off? I think the market will continue to shake it off as long as consumers continue to buy all this stuff," said TKer founder and editor Sam Ro on Yahoo Finance Live. "I think that is the lesson from the retail sales report, something from Walmart earnings, from Target earnings, from TJX earnings. Even as retailers are raising prices, consumers are going and shopping and still buying this stuff."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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