The Fed should stay its course: Strategist

Believe in the rally?
Believe in the rally?   

The rally of the past two days seems to be policy rhetoric driven, Kate Moore, chief investment strategist at JP Morgan Private Bank, said in an interview with CNBC.

The comments came as stocks attempted to make gains Thursday and Friday, after the worst three-week losing streak for all three major averages. Many market watchers have attributed the current volatility to diverging economic policies and fears of a global recession amid low oil prices.

"Every time there's good news from a policy maker, or a promise, markets breathe a sigh of relief," Moore told "Power Lunch" on Friday.

"I want to see the next leg in equities really coming from confidence in the fundamentals."

Stocks saw a surge on Thursday as European Central Bank President Mario Draghi hinted that the bank may further stimulus as early as March. Next week the Federal Open Market Committee is scheduled to meet, which Moore hopes doesn't influence market sentiment.

"I would suggest that going into the FOMC next week, we can't expect the Fed to promise to hold off on raising policy rates for the balance of 2016," she said, adding that this is so long as the labor market and U.S. macro picture remain strong.

U.S. weekly jobless claims came in at 293,000 in comparison to the 278,000 estimate on Thursday. The claims saw an increase of 10,000 from the prior week, according to U.S. Department of Labor. The report stated that no special factors impacted this week's initial claims.

The department saw an increase of 6,500 in claims in the four-week moving average at 285,000 from the previous week.

In the scenario that the Fed doesn't continue tightening as it decided late last year, raises questions on whether the decision will ignite another sell-off. In the reverse, Moore notes a dovish Fed may alter the people's confidence in the committee.

"I think if the Fed meaningfully changes their language, it's also going to reduce people's confidence (I think) that the Fed really knows what they're doing," Moore stated.

"If the market reacts negatively to the fact that they don't change the tone of their language, well, we'll just have to take that," she continued, adding that she wants the Fed to feel comfortable normalizing policy, as the U.S. economy is in "pretty good shape."

Still, the market should expect more volatility ahead, said Katie Nixon, CIO at Northern Trust Wealth Management. The expert, however, does not foresee the current conditions as "cataclysmic."

"What I do think is that the outcomes are just more uncertain now," she said about economic headwinds.

"And that uncertainty is being priced into the equity markets now with lower prices."