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Tags: warren buffett | stock | valuations | rates | invest | berkshire

Buffett: Stock Valuations Make Sense Right Now

(Paul Morigi/Getty Images)

By    |   Tuesday, 03 October 2017 05:00 PM EDT

Billionaire Warren Buffett told CNBC on Tuesday stock market valuations make sense with interest rates where they are.

Rates have been a "powerful factor" in equities values, he told CNBC.

The chairman and CEO of Berkshire Hathaway said stocks are going to outperform bonds.

"I can't remember any decision we ever made based on the Fed," Buffett said, stressing he buys shares of companies he likes rather than playing the overall market.

But Buffett said Berkshire is holding off selling investments until he sees how the GOP tax reform efforts play out in Washington.

U.S. stock indexes touched new record highs on Tuesday, boosted by a rally in tech stocks and gains in Ford Motor and General Motors after strong September vehicle sales.

Technology stocks have rebounded from a sharp selling seen last week, with Apple and Intel supporting Tuesday’s gains. The sector has been the biggest gainer year-to-date, up 26 percent so far, Reuters reported.

“The tech stocks had it rough about 10 days ... I think they experienced profit taking where they were used as an ATM for purchases,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“I think those days have run their course and they’re starting to get some sponsorship again.”

Investors are also looking at upcoming quarterly earnings from big names to help justify the lofty market valuations.

Third-quarter earnings for S&P 500 companies are expected to increase 5.5 percent from a year earlier, according to Thomson Reuters research, after rising a better-than-expected 12.3 percent in the second quarter.

The indexes have been scaling record highs and on Monday found support from factory data that pointed to underlying strength in the U.S. economy.

The encouraging data helped world shares touch their latest record highs on Tuesday, while lifting the dollar to its loftiest in 1-1/2 months.

“The first two days of October seem to be a continuation of what happened in the last two weeks of September ... we’re gradually grinding higher in the month of October,” said Hogan.

(Newsmax wires services contributed to this report).

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Billionaire Warren Buffett tells CNBC stock valuations make sense with interest rates where they are.
warren buffett, stock, valuations, rates, invest, berkshire
Tuesday, 03 October 2017 05:00 PM
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