Nomura's Joseph Mezrich sees market rally continuing as profits recover

Bears who warn the U.S. stock market has gone too far too fast -- the broad Standard & Poor's 500 index is up 18 percent year to date -- may not get much vindication anytime soon. Investors should see stocks continue to rally as long as corporate profits keep recovering, says market expert Joseph Mezrich (pictured), Nomura Securities International's head of quantitative research.

And the signs look good. The estimated earnings growth rate for the Standard & Poor's 500 during the fourth quarter is 216 percent, according to Thomson Reuters. Even stripping out the volatile financial sector, the other eight out of nine sectors are expected to show a blended growth rate of 7 percent. But that's still double the 3.5 percent economic growth of the U.S. economy in the third quarter. And Mezrich says it's the fact that profit growth is outpacing the U.S. economy that stocks have rallied ahead of an economic recovery.