Robert Leary, chief executive officer and president of TIAA-CREF Investment Management, speaks during a Bloomberg Television interview in New York, U.S., on Thursday, March 24, 2016.Chris Goodney/Bloomberg
Robert Leary, who oversees $854 billion as chief executive officer of TIAA Global Asset Management, said he expects U.S. stocks to rebound, based on the enduring strength of the world's largest economy, at a time where bonds offer a less attractive alternative.
"The U.S. economy is more strong and more robust than it's been given credit for, so we do think we're going to see, in the second half of this year, a bit of a pickup" in stocks, Leary said in a televised interview Thursday. "We actually think we could go back above the S&P highs that we have reached before, and maybe be up 5 to 10 percent in the S&P this year."
The Standard & Poor's 500 Index is trading below its 2014 closing level amid slowing growth in China and a slump in commodity prices. Leary said the U.S. is well positioned to withstand those pressures.
"Some people I know, they think there's a recession ahead," he said. "But overall, we think that there is fundamental strength in the economy and we do think that there's a lot of room for the equity markets to grow."
Leary cited employment gains and wage growth as potential catalysts for stocks. Filings for initial jobless claims in the U.S. have been less than 300,000 for 55 weeks, the longest stretch since 1973 and a level economists say is consistent with a healthy labor market.
'Other options?'
TIAA provides retirement services and insurance to teachers and customers who work for academic, research and other non-profit organizations. The company, led by former Federal Reserve Vice Chairman Roger Ferguson, also manages funds for institutional clients and invests in assets such as agriculture and real estate. Leary said his optimism in stocks is based partly on their prospects compared with other securities.
"What are people's other options?" he asked. "To be in the fixed-income markets and, in particular, things like money markets, there's not much there for investors."