Wealth manager Dan Veru believes US stocks could experience a sustained decline, before starting a “strong rally” later this year. A broad-based rally in US stocks in July stoked hopes of a sustained rally in equities. Speaking on CNBC’s “Squawk Box Europe” before the start of Monday’s US trading session, Veru attributed July’s good results to better-than-expected earnings and “acceptable” third-quarter guidance. “. Veru, chief investment officer at Palisade Capital Management, said he expects the recent bear market rally to continue as more companies report. All three major US averages closed higher on Wednesday, marking a 2-day losing streak. The Dow Jones Industrial Average is up more than 400 points, while the tech-heavy Nasdaq Composite is up about 2.5%. Broad-based S&P 500 index hits highest level since June year end. “As fall approaches, I believe stocks could be vulnerable to a fresh sell-off. A drop is usually a period of equity weakness, but I’m concerned that the full impact of the fall is. Higher interest rates and quantitative tightening from the Federal Reserve could be, Veru said, noting that the full impact of inflationary pressures and the series of rate hikes this year will be felt this quarter. , which will lead to “greater uncertainty” for third-quarter earnings. “Additionally, the upcoming US midterm elections, high energy prices and supply chain issues could create create enough uncertainty to cause stocks to weaken. I’m not sure that US stocks will make new lows, but most of the recent gains could be lost. before November 2 [congressional] He added. commodity prices should start to fall. At the end of the year, a new bull market will begin to take us into 2023 and beyond, he said. Energy is the best performing sector on the S&P 500 by a mile long this year, having grown more than 40% year-to-date, according to FactSet data. Read more Wall Street experts say these small caps are good Buy in recession – BofA up 40% These stocks are ready for a comeback if inflation peaks, Jefferies says Has the market bottomed yet? over the past month – underperformance by consumers, technology and industry – amid falling crude oil prices and growing recession fears. With the US dollar “likely to top” in the near term, Veru said that bodes well for industrial and commodity stocks. In particular, he believes the outlook for the industrial sector is “pretty good” while valuations are also more attractive. He is also a fan of the healthcare sector due to its “defensive characteristics”. The industry is down 6.3% this year, outperforming the S&P 500, which has shed nearly 14% of its market capitalization this year. Palisade Capital Management manages more than $5 billion in assets by the end of 2021.