Stocks are still in a bear market after the post-CPI rally, but the market will keep pushing higher through the start of 2023, says Guggenheim investment chief Scott Minerd

• The post-CPI rally in stocks will act as support to move higher through early 2023, Guggenheim CIO Scott Minerd said.
• "I would just ride the seasonals here. Things are still fairly well-valued and inflation is coming down."

The surge in US stocks set off by the October inflation report should serve as a springboard for further gains, Guggenheim's chief investment officer Scott Minerd said, adding that the underinvested should step into the market.

"I do think we're going to continue to rally into the beginning of the year, and then we'll get a chance to take a fresh look at things," Minerd told CNBC in an interview on Thursday. He said his shop has increased its exposure to equities, high-yield, longer-dated credit, and investment-grade securities.

Stocks posted their best session since 2020 on Thursday after government data showed both headline and core consumer price inflation in October rose by less than economists had anticipated, to rates of 7.7% and 6.3%, respectively. The Nasdaq Composite jumped 7.4%, the S&P 500 picked up 5.5%, and the Dow Jones Industrial Average shot up nearly 1,200 points.

So-called risk assets jumped as investors see the Federal Reserve moving toward the end of the aggressive rate-hike campaign it launched to tame scorching inflation. The Fed has raised interest rates by 3.75 percentage points this year from 0%.

"It's no surprise that inflation is slowing - the forward numbers have shown that they're slowing. And given the valuations have been so strong, I was expecting we should get a bear-market rally," he said.

Minerd sees the S&P 500 able to advance to 4,100, which implies an upside of 3.6% from Thursday's close.

The "bear market is still solidly intact," he said, reiterating a view he expressed in September when he projected a 20% plunge in the S&P 500 by mid-October as a mix of poor seasonals and overvaluations bode poorly for stock prices in the short-term.

"I would just ride the seasonals here. Things are still fairly well-valued and inflation is coming down and I think we are prone to more downside surprises on inflation, which would be good for the bond market," he said.

"I would stay fully invested at this point, as I encouraged people a month or so ago to be, and just let the data tell us if the bear market will continue or are things really at a turning point."