The deteriorating situation in Iraq "might play out for quite some time," but U.S. stocks should be able to weather the storm, said Howard Ward, Gabelli Funds' chief investment officer for growth equities.
On Friday, Ward told CNBC that he still thinks the S&P 500 will finish the year at 2,080, which would be a rise of 7.7 percent from Thursday's close.
The S&P closed at a record high on Monday. And even with three straight days of declines, the index is up nearly 4.5 percent in 2014. Ward does not see a correction right now.
The real action for investors concerned about Iraq is in the oil pits. "There's a fear factor … that clearly has pressured crude prices higher," Ward said in a "Squawk Box" interview.
Oil prices, if they keep rising, could hurt the economy and, in turn, the broader stock market. But he sees opportunity in oil stocks, which "tend to be highly correlated with the price of crude."
Gabelli Funds is invested in domestic energy stocks Pioneer Natural Resources, EOG Resources and Continental Resources. Ward said he plans on holding these stocks for a while, but won't advise new buyers to get in unless they too have a long-term time horizon.
"These stocks have done well. They're up on a spike. You could get a reversal here is things calm down."
Still, the unrest in Iraq really poses no real immediate threat to oil supplies, said Charles Maxwell, chairman of American DG Energy, on "Squawk on the Street." After all, Iraq produces about 400,000 barrels a day, or less than 1 percent of the world's total supply at 900 million barrels a day, he said.