BlackRock's Doll sees solid 2009 U.S. stocks gains

By Richard Leong

NEW YORK (Reuters) - The U.S. stock market will gain between 7 percent and 12 percent in 2009, despite an economy that will continue shrinking for at least the first half of the year, a top BlackRock executive said on Tuesday.

Robert Doll, chief investment officer of global equities at the largest publicly-traded U.S. asset manager, said the S&P 500 .SPX could reach anywhere from 1,000 to 1050 by year-end, adding that emerging market equities would fare even better.

"With record fiscal and monetary stimulus, substantially lower oil prices, much cheaper valuations, significant negative sentiment and lots of cash on the sidelines, it is likely that stocks will begin to look 'over the valley' sometime in 2009 and experience a noticeable rally," Doll said at a press briefing.

During 2009, Doll expects crude oil to trade between $60 and $80 per barrel.

The bottoming process for U.S. equity markets began on October 10, 2008 and was further confirmed by a second market low on November 21, Doll said.

However, any economic recovery will likely be muted and market volatility will continue for all of 2009, Doll said.

"We should see multiple digit percent rallies as well as declines all through the year" in U.S. stocks, Doll said.

He expects global economic growth to be below 2 percent this year for the first time since 1991, and for U.S. gross domestic product to be negative at least for the first half of 2009.

This year, U.S. equities should outperform European stocks, while emerging markets should perform more strongly than developed ones, he said.

Among sectors, Doll expects energy, healthcare and technology to outperform utilities, financials and materials in 2009.

The U.S. budget deficit is expected to rise above the $1 trillion mark in 2009, while the Treasury market yield curve, or the gap of longer maturities' yields over shorter maturities, is expected to steepen through the end of the year, he said.

Doll expects that the yield spreads of corporate and municipal bonds over Treasuries will narrow this year.

(Reporting by Richard Leong, writing by Pedro Nicolaci da Costa and John Parry; Editing by Chizu Nomiyama)