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Earnings Expected to Drive Stock Market

Monday, 2 Apr 2007 | 2:37 PM ET

Drew Kanaly, chairman of Kanaly Trust Company, told CNBC’s “Power Lunch” that there will be some positive surprises in first-quarter earnings.

“We’ll see earnings carry the day until the Fed begins cutting, probably in the fall,” Kanaly said Monday. “The market stepping stones will be earnings for the next quarter or so and then we’ll await the Fed’s announcement.”

He sees value in international small-cap stocks.

Jack Ablin, chief investment officer for Harris Private Bank, agreed that earnings will drive the market in the immediate future.

Market Mavens
A mid-day market update at the beginning of the second quarter, with Drew Kanaly, Kanaly Trust Company chairman; Jack Ablin, Harris Private Bank CIO and CNBC's Sue Herera

“I think that among large-cap stocks, the highest quality stocks, investors are already anticipating the worst,” Ablin said.

But he said politics--not finance–-poses the immediate risk for investors.

In the S&P 500, Ablin said he likes defensive sectors such as materials, healthcare and utilities. He’s avoiding technology, finance and consumer discretionary stocks.

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

  • Tyler Mathisen co-anchors CNBC's "Power Lunch." Mathisen also co-anchors "Nightly Business Report produced by CNBC."

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Kenny Polcari