Jeremy Siegel: With tech down for the count, a ‘surprise’ move could lead the market higher

The stock market can “absolutely” go higher even without technology stocks leading the way, Wharton School finance professor Jeremy Siegel told CNBC on Friday.

Tech stocks, which have delivered the best returns in recent years, have been hammered lately. October was their worst month since 2008.

“We might get surprised by [investors] moving into some more dividend stocks even in a rising interest rate environment because bonds wouldn’t be good and people who don’t want the risk of tech might say, ‘Hey, I want stocks that have had long-term good dividend performance for income,'” Siegel said on “Closing Bell.”

“That might surprise us in 2019, to bring back value after this tremendous long-term run in growth.”

U.S. stocks closed down Friday as fears of an economic slowdown, sparked by falling oil prices, weighed on investors. Tech stocks were heavily hit, leading to a 1.7 percent decline in the S&P 500 tech index. Amazon, the worst performer of the group, fell 2.4 percent.

In all, the five most valuable companies — Apple, Microsoft, Amazon, Alphabet and Facebook — lost a combined $75 billion in market value.

Siegel said whenever there is a rotation from one sector to another there will be “choppiness going forward.”

He also said rising yields, “the biggest immediate threat” to the market, will also contribute to that volatility.

U.S. Treasury yields fell Friday after the Federal Reserve announced the day before that it had decided to keep the federal funds rate unchanged. Bond yields move inversely to prices.

However, the central bank is expected to raise interest rates in December amid potential trade disruptions and a slowing economy, Siegel said. He noted that most estimates for fourth-quarter gross domestic product are under 3 percent.

In the long run, he still thinks stock valuations are really attractive.

He advised investors to “sit pat” because “there are good values out there.”

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