Despite 'extraordinary' 2023 rally, stocks are just OK, BlackRock's bond chief says

• BlackRock's bond chief Rick Rieder says the stock market rally has been "extraordinary," but he isn't overly bullish on equities just yet.
• Stocks have been on a tear since the start of the year, with the Nasdaq ahead 17% in the past month.

BlackRock's bond chief Rick Rieder said the stock market rally has been "extraordinary," but he isn't overly bullish on equities just yet.

The tech-heavy Nasdaq Composite and S&P 500 are up 16% and 9% in the past month, respectively. This follows a year where the two benchmark indices ended with losses of 33% and 19%.

"I think January was one of the most extraordinary months I've seen in my career," Rick Rieder, BlackRock's' global fixed income CIO, told Bloomberg TV on Friday. "The short covering rally in places that had been beaten down a month prior was pretty extraordinary."

The bond chief, who manages roughly $2.4 trillion in assets, said last month's rally was especially unusual because shares of companies that missed Wall Street's quarterly earnings estimates outperformed shares of companies that beat views.

"This was a crazy, crazy month in terms of what performed versus what didn't," he said, describing the stat as the "most incredible I've ever seen."

Despite the stock market outperformance of the companies that fell short on earnings, he said he would still buy companies with "quality income."

But overall, equities are "just OK" right now due in part to profit margins being compressed, Rieder added.

To be sure, the earnings landscape will not be "cataclysmic," and revenue will "meander around."

"But I think you get margin compression, and so part of why I'd rather buy income — both debt and equity — I'd rather buy stable income much more so," he added.