BlackRock Inc. turned bullish on U.S. stocks as the world’s largest money manager says impending fiscal stimulus will boost already strong momentum for earnings growth.

Valuations are now slightly more attractive after the recent market declines, helping inform its decision to raise U.S. equities to overweight from neutral, according to global chief investment strategist Richard Turnill at BlackRock, which oversees about $6 trillion in assets.

“Economic strength was already changing the tone of earnings momentum but U.S. tax cuts and government spending plans lit a fire under the trend,” he wrote in a note. “Upward revisions are solid globally, but the U.S. strength is unmatched.”

Although U.S. equities have retraced half of the sell-off that began late January, upcoming benefits from U.S. tax and spending plans are still underappreciated by investors, according to Turnill. While valuations are historically high, earnings growth matters more over shorter time horizons at this stage of the cycle, he said.

Against a backdrop of already solid economic fundamentals -- synchronized global growth and strong earnings -- the U.S. government’s plan to cut tax and increase spending will throw further fuel onto the economy. The combined impact on the deficit over the next two years of Republican tax cuts and the budget deal passed by Congress on Feb. 9 will likely exceed the $580 billion President Barack Obama’s economic stimulus added in 2009 and 2010 during the depths of the recession.

The news is less positive for European shares. Although BlackRock still sees solid returns ahead, lower relative earnings growth will limit their potential to outperform, Turnill said. The firm has shifted its view on stocks in the region to neutral, it said.

The S&P 500 Index has risen about 16 percent over the last 12 months, compared to a less than 2 percent gain on the Stoxx Europe 600 Index.

This article was provided by Bloomberg News.