Here's what will drive stocks higher in 2015

Stocks are set for double-digit gains in 2015, Ed Keon, portfolio manager at Quantitative Management Associates, said Wednesday, breaking with consensus of high single-digit growth.

The market will begin to see stock valuation increases, Keon told CNBC's "Squawk Box." While earnings will grow no faster than they did in 2014, interest rates will stay fairly low, he added.

"It makes sense that stock market valuations should be higher, because if discount rates are lower you should have higher-than-normal valuations. So I think that's going to be the driver of returns in 2015 and beyond," he said.

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Defensive sectors outperformed in 2014, Keon said, because investors wanted two things: safety and income. The desire for the former resulted in 20-percent returns from long-term government bonds, he said, and the search for the latter led income-generating sectors like utilities to do well.

But David Spika, senior portfolio specialist at Westwood Funds, said volatility will return next year as investors adjust to a change in the Federal Reserve's monetary policy and grapple with uncertain global growth and central bank easing outside the United States. As a result, cyclical sectors such as technology and consumer discretionary are set to outperform, and investors will have to be more selective, he said.

While economic and earnings growth have been factors in driving the market, he said multiple expansion has been a huge factor, and that's largely a function of Fed policy.

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The stock market has gone up in the last 18 months not because corporate profits were surprisingly good, but because stakeholders now see the economy and corporate profits expanding for a longer period of time, said Richard Hoey, BNY Mellon's chief economist.

"I think that this economic expansion is going to last for another several years, which means you can think, 'What's the valuation of the stock market against the earnings of 2016 if we're still in a continuing economic expansion in 2016?'" he said. "If you think you're going to start a recession in a month, that's a different story, but that's not going to happen."

Spika agreed that the economy is in the mid-phase of its growth cycle and should continue growing for several years.

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