Earnings will be inflection point for stocks: Pros

The direction of the stock market depends on how companies choose to frame their third-quarter earnings results in the days ahead, stock market observers told CNBC on Wednesday.


A trader works on the floor of the New York Stock Exchange.
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A trader works on the floor of the New York Stock Exchange.

The key will be whether corporations blame weakness on a strengthening U.S. dollar, or cite lower energy prices as a tail wind, Sarat Sethi, a principal and portfolio manager at Douglas C. Lane & Associates, said on "Squawk on the Street." To Sethi, Q3 earnings are an "inflection point" that will set the tone for the markets.

"It's this week that's going to help us decide what's going on. Let's see what happens with earnings. We have something we can sink our teeth into," Jack A. Ablin, executive vice president and chief investment officer at BMO Private Bank, said on "Squawk on the Street."

Read MoreEarnings season begins: Bright spots and worries

For the time being, Ablin is "holding firm" on equities until earnings season gets into full swing.

To Sethi, most companies are enjoying "moderate growth," so he thinks the market's decline has provided a buying opportunity.

"This is going to be a good opportunity to get some really high-quality companies because you have seen a lot of companies just sell off," Sethi said. "Even though the market is down only 5 or 6 percent, it feels a lot worse."

Q3 earnings are ramping up. On Thursday, PepsiCo will deliver quarterly results. Fastenal, Infosys and Progressive are scheduled to report on Friday. Several large banks are expected to post results next week.