Asset manager Dan Veru believes that US stocks could go through a continuous decline, before starting a “powerful rally” by the end of the year. A major rally in US stocks in July led to expectations of a continued recovery for equity markets. Speaking on CNBC’s “Squawk Box Europe” before the start of the US trading session on Monday, Veru attributed July’s good showing to better-than-expected earnings and “acceptable” third-quarter guidance. Veru, who is chief investment officer at Palisade Capital Management, said he expected the recent bearish market rally to continue as more companies report. All three major US averages closed higher on Wednesday, snapping a 2-day losing streak. The Dow Jones Industrial Average rose more than 400 points, while the high-tech Nasdaq Composite jumped about 2.5%. The broad-based S & P 500 hit its highest level since June. ‘Powerful’ year-end rally Veru believes the stock market is still macro-driven and could see further volatility before the end of the year. “As the fall approaches, I believe stocks may be at risk of a new round of selling. The fall is usually a period of equity weakness, but I am concerned that the full force of higher interest rates and quantitative tightening from the Federal Reserve may lead to a round. to create new sales,” said Veru. He noted that the full impact of inflationary pressures and the series of interest rate hikes this year will depend on this quarter, which will translate into “greater uncertainty” for third quarter earnings. “Also, the upcoming US mid-term elections, high energy prices, and supply chain issues could create enough uncertainty to weaken stocks. I’m not sure that US stocks will make a new low, but many of the recent gains could be lost before November 2nd [congressional] Still, Veru predicts a “powerful year-end rally” for stocks after the sell-off. Commodity prices should begin to decline. By the end of the year, a new bull market should begin well into 2023 and beyond,” he said. , has gained more than 40% year to date, according to FactSet data Read more Wall Street pros say these small caps are good buys as a recession looms – BofA gives any 40% upside The stocks are this is poised to rebound if inflation peaks, says Jefferies Has the market bottomed out over the past month – underperforming consumer discretionary, technology and industrials – amid falling crude oil prices and fears of the economic recession. With the US dollar having “peaked” early, Veru says this looks good for industrial stocks and commodities. , he believes the outlook for the industrial sector is “good” and valuations also look more attractive. He is also a fan of the health care sector because of its “protective characteristics.” The sector is down 6.3% this year, outperforming the S & P 500, which has lost nearly 14% of its market cap this year. Palisade Capital Management manages more than $5 billion in assets at the end of 2021.