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By Jason Stipp | 07-30-2013 12:00 PM

Doll: U.S. Recovery Not Firing on All Cylinders

We are getting only some of the economic and earnings fundamental improvement we need to keep pushing us forward, says Nuveen chief equity strategist Bob Doll.

Jason Stipp: I'm Jason Stipp for Morningstar.

Despite a few bumps, the stock market has continued its march upward in 2013. But are there any cracks in the foundation?

Here to offer his take is Bob Doll, chief equity strategist at Nuveen.

Thanks for being here, Bob.

Bob Doll: Thank you, Jason.

Stipp: It's been a good year to-date for the stock market, but we have had a few stumbles. The most recent one really keyed in on some words that Bernanke had said about the possibility of easing off some of that stimulus later in the year. I think this might have led some folks to think that a lot of the market is really underpinned by the Fed's activity, if the market got so upset by this potential change in course, or easing up.

To what extent, in your opinion, is the market being bolstered by the Fed's stimulus?

Doll: There is no question the Fed has helped big time. The Fed has helped the market, but the Fed has also helped the economy. Separating the two, I think, is virtually impossible.

Central banks and our Fed help every recession. Have they had to help a little bit more this time? Absolutely, because we had a deeper recession.

So, I think, what the Fed has done is said, we've been giving you investors a 100-mile-an-hour tailwind, and we are going to reduce it at some point to an 80-mile-an-hour tailwind. It's still a tailwind. It's not a headwind, but it's not as powerful as it was--meaning, we need some revenue and earnings growth.

Stipp: And when you look at the fundamentals of stocks--we are in earning season right now--do you think that we have some of that foundational underpinning, even if the Fed does back away, that we won't see a big correction?

Doll: I'm glad you used the word "some," because that's all we've got, "some," not quite good enough. And that's been the story of this recovery. I like to say it's the eight-cylinder car that continues to operate on five cylinders. You can move down the road with five cylinders, but it's a bumpy ride, and that's exactly what we are experiencing.

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