Asset manager Dan Veru believes that US stocks could survive a long-term decline before starting a “powerful rally” before the end of the year. A broad rally in U.S. equity prices in July raised hopes for a long-term recovery in equity markets. Speaking on CNBC’s Squawk Box Europe ahead of the start of Monday’s US trading session, Veru said July’s results were better than expected and on “acceptable” guidance for the third quarter. Veru, who is chief investment officer at Palisade Capital Management, said he expected the recent bear 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 tech-heavy Nasdaq Composite jumped about 2.5%. The broad S&P 500 hit its highest level since June. ‘Powerful’ end-of-year rally Veru believes the stock market remains macro-economic and could still see further volatility before the end of the year. “As the decline approaches, I think stocks could be vulnerable to a new round of selling. A decline is usually a period of weakness for stocks, but I’m concerned that higher interest rates and quantitative tightening by the Federal Reserve could come full force to create a new round of selling,” said True. He noted that the full impact of inflationary pressures and this year’s series of rate hikes will be felt this quarter, meaning “more uncertainty” for third-quarter earnings. “In addition, the upcoming U.S. midterm elections, high energy prices and supply chain issues could create enough uncertainty to send stocks weaker. I’m not sure that US stocks will make new lows, but most of the recent gains could be lost. until November 2 [congressional] in the elections,” he added. Still, Veru predicts a “powerful year-end stock rally” after the bearish selloff. “The Federal Reserve is likely to raise interest rates and inflation due to supply chain issues along with higher commodity prices should start to ease. By the end of the year, a new bull market should begin to take us into 2023. and the following years,” he said. Must-Have Sectors How should investors help under these circumstances? Veru believes “the time has come” to add energy stocks given the recent pullback. The energy sector is the S&P 500’s best performer this year, up more than 40 percent year-to-date, according to FactSet. Read More Wall Street pros say these small caps are good buys as recession looms – BofA raises 40% These stocks are poised for a comeback if inflation peaks, Jefferies says. Has the market bottomed out? Over the last month – as crude oil prices fall and the recession deepens – As crude oil prices fall over the last month and the recession deepens. The US dollar has “probably peaked” in the near term, Veru says, which bodes well for industrials and commodity stocks. , he believes the outlook for the Industrials sector is “pretty good” and valuations are also looking more attractive. He’s also a fan of the healthcare sector, given its “defensive qualities.” The sector is down 6.3% this year, outperforming the S&P 500, which has shed nearly 14% of its market cap this year. in 2021 at the end of Palisade Capital Management manages more than 5 billion USD assets.