CNBC Stock Blog

Stronger Earnings Will Send Markets Higher: Strategist


The markets will continue to grind higher, propelled by forthcoming reports that will show growing strength in the economy, said Alec Young, equity strategist at Standard & Poor's, and Benny Lorenzo, CEO of Kaufman Brothers.

Checking Market's Moves

"While we [at Standard & Poor's] think that the explosive gains that we've seen since March probably mean that the upside has to moderate a bit, we still think markets are heading higher," Young said.

Lorenzo said the markets are looking for top-line growth in third-quarter earnings reports, and if companies don't deliver, it will be a big blow. But Young doesn't anticipate this being a problem, he said.

"We think that there's more risk being out of the market than in it," he said. "Because we've seen so much cost-cutting, it means that at the slightest sign of top-line growth, a tremendous amount of money drops to the bottom line."

Lorenzo specifically recommended the technology sector, adding that Kaufman Brothers recently upgraded online retailer eBay .


He added that he thinks the economy will show GDP growth in the third quarter, which it will maintain into 2010.

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Thursday's Top Gainers on the Dow

Home Depot

American Express





Lorenzo does not own any shares of eBay.

Disclosure information was not available for Young or his company.