"When we get back to the business of looking at corporate earnings, unemployment info and consumer confidence, we will realize that things are not as strong as they once were."
Tobacco stocks posted the biggest declines in the S&P 500 this week after Illinois legislators rejected a proposal to limit the amount tobacco companies have to deposit to appeal legal verdicts.
Altria Group Inc., parent of the world's largest cigarette maker, dropped 12 percent for the week and recorded the biggest drop in the S&P 500. Altria's Philip Morris USA unit must deposit US$12 billion by April 21 if it wants to appeal a US$10 billion lawsuit it lost about misleading advertising.
RJ Reynolds Tobacco Holdings Inc, the second-largest US tobacco company, lost 6.8 percent.
Some investors forecast stock prices will be higher by the end of this year -- pending victory in Iraq -- because valuations are attractive.
"Stocks are becoming more attractively valued," said Reisner, who has been buying shares of health care companies including Pfizer Inc. and Mylan Laboratories Inc.
The S&P 500 trades at 17 times profit forecasts, down from 21 times estimates one year ago.
"There will be justification for higher stock prices by year end," said Wayne Reisner, who helps oversee US$2 billion at Carret Investment Counselors. "Expectations for equity returns are in the high-single digits."
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