By Caroline Valetkevitch
NEW YORK (Reuters) - The outlook for U.S. stocks is looking bright as growth in global economies defies even the most bearish expectations.
While the pace of growth is starting to fuel concerns about inflation, strategists addressing the Reuters Investment Outlook Summit in New York this week said price pressures would likely remain contained, lending support to equities, especially industrial and energy companies.
"The entire world is in a tightening mode. This means things are generally good. The world economy is doing relatively well," said Paul Hickey, co-founder of Bespoke Investment Group in Harrison, New York.
Last week, worries about inflation pushed benchmark U.S. bond prices lower, pushing yields up above 5 percent for the first time since August.
Central banks have also been raising interest rates, including the European Central Bank and New Zealand's.
Even so, investor optimism about takeovers, profits and share buybacks is underpinning demand for stocks.
"In stocks, it's certainly a buying opportunity," Hickey said. "These bond market routs don't always cause sell-offs in the stock market, but when they do, going forward the stock market as measured by the S&P 500 has produced much better-than-average returns in the one, three and six-month period."
Stocks finished last week with their heaviest losses since the week ended March 2 as bond yields soared. Rising yields can cut into corporate profits and make takeovers more expensive as borrowing costs rise.
Technical analyst Louise Yamada of Louise Yamada Technical Research Advisors LLC in New York said, "We don't have structural problems yet," in the stock market.
Booming economies in developing nations have produced billions of new consumers with money to spend, she said. This "may be having a 'bull-market' impact on markets similar to what we've seen in the postwar period in the '40s and '50s," Yamada said.
Energy and materials sectors in particular have benefited from the global economic boom, Yamada added.
Yamada said she thinks the Dow Jones industrial average could hit 16,000 at some point, as stocks continue their upward push since bottoming out last July. The Dow is up 9.4 percent for the year-to-date, while the Standard & Poor's 500 index .SPX is up 8.1 percent and the Nasdaq Composite .IXIC is up 8.6 percent.
Strategists said growth outside the United States was far stronger as the slowdown in the U.S. housing market runs its course.
(For summit blog: summitnotebook.reuters.com/)
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