A majority of S&P 500 companies have beaten the Street's profit estimates this earnings season, but investors can hardly get excited about the revenue picture, Mark Luschini, chief investment strategist Janney Montgomery Scott, said on Wednesday.
The market is "conflicted" as less than half of companies that have reported to date have beaten on the top line, he said.
"You can only manufacture earnings so far before revenues begin to matter, and at the moment I think that's what's weighing on equity prices," Luschini told "Squawk Box."
Despite some volatile day-to-day swings, stocks have been largely rangebound in recent weeks, trading below the highs of early March.
Traders need to see economic data for April that suggests GDP is back on track for growth on the order of 2.5 percent after a winter marred by a West Coast port strike and cold weather that carried into March and April, Luschini said. That would support the view that earnings will in fact grow, giving stocks some footing to eventually climb upward.
That data will not come through for another several weeks, however.
"Between now and then, the absence thereof and kind of uninspiring corporate earnings means we're probably going to stay locked in this channel for some time," he said.
Janney expects modest earnings growth later this year as U.S.-focused companies work through revenue impacts from weather and the port strike, and as multinationals face less violent moves in the dollar, which has appreciated about 25 percent from the end of June.
"We're not expecting anything particularly robust, but certainly something in the mid-single digits ought to be sufficient to substantiate stable if not higher equity prices," Luschini said.
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Looking forward, Janney is constructive on consumer discretionary stocks on the view that a strong labor market data, positive consumer sentiment, and growing household net worth will continue to provide horsepower for spending.
Luschini also likes the health-care sector, in particular medical device makers, managed care firms and pharmaceuticals.
As for financials, strong capital market performance is offsetting net interest margin compression, making big money center bank stocks more attractive, he said.