As economy starts to 'crank,' strategist says invest here

Stocks rose Tuesday on better-than-expected economic news, and one strategist thinks both the market and the economy are going to continue to pick up steam.

In fact, Phil Orlando, chief equity strategist at Federated Investors, is predicting the S&P 500 could hit 2,350 next year largely in part to increased earnings growth.

That means investing in industrials, consumer discretionary, financials and technology, he told CNBC Tuesday.

"If we're right that the economy is starting to crank here then it ought to be the more economically sensitive categories not the defensive categories that are going to sort of catch a bid here," Orlando said in an interview with "Power Lunch."

"These are areas that ought to do well if the economy is starting to pick up steam."

Trader on the floor of the New York Stock Exchange.
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Trader on the floor of the New York Stock Exchange.

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On Tuesday, the Commerce Department reported gross domestic product climbed at a 3.9 percent annualized rate, up from an initial 3.5 percent estimate. Orlando, who started the quarter with a 3.7 percent forecast, was "delighted" to see the revision.

However, Scott Wren, senior equity strategist at Wells Fargo Advisors, is a bit less optimistic. He said it would be a mistake to think this is the beginning of a new trend.

"We're in a modest growth, modest inflation environment. I don't think that's going away anytime soon and could easily last a couple of years," he said.

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Wren, who has a year-end target of 2,150 to 2,250 for the S&P, also likes consumer discretionary, industrials and technology.

"Modest growth, modest inflation—stocks can do well in that," he said.

"I think the market's going up. The cyclical bull market still has more room to run."