US Markets

This is why the market is trading higher: Darst

Pro likes Apple, financials & energy

The reason the market is doing well and ignoring "the sloppy" part of the employment report and a lackluster second-quarter GDP forecast comes down to the "four or five S's," independent investment consultant David Darst said Thursday.

"China continues to stimulate, Greece is squaring up its debts, Europe is strengthening, OK, and house prices are stabilizing. You could also say the dollar is slipping," the former chief investment strategist at Morgan Stanley Wealth Management said in an interview with CNBC's "Closing Bell" on Thursday.

"That's why the market wants to lift, it wants to go up."

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

U.S. stocks rose 1 percent Thursday, with the setting a new closing record. The Dow Jones industrial average came within 50 points of its record high after gaining 150 points in the morning. The Nasdaq rose more than 1 percent to within 50 points of its record close.

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Darst said the market is in a dull period right now, with many investors sitting on the sidelines.

"It can't break out. If it starts to move, people are going to come rushing in."

Over the last five years, only $600 million went into equity mutual funds, he noted, while $1.3 trillion went into bond mutual funds.

"They fought this the whole way up."

Darst likes technology, specifically Apple as well as financials and the energy sector right now.

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Meanwhile, he also had a warning for art investors, at least when it comes to modern and contemporary works. He believes they may be seeing a top.

However, "nobody cares right now" about old masters, impressionist and post-impressionist work.

"The compound rate of growth for old masters last 10 years [is] 0.2 percent," he said. "But these Andy Warhols, Picasso … be careful."

In February, renowned economist Nouriel Roubini warned there may be a bubble forming in the art market.

—CNBC's Evelyn Cheng contributed to this report.