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Expect bumpy ride for US stocks: Strategist

Investors in U.S. equities should expect higher volatility and slow grind higher in the back half of the year, strategist Jeff Kleintop said Friday.

"Economic momentum in the U.S. has not been improving as we've seen in Europe and that means, I think, a bumpy ride as we look to the second half, coupled with the potential for rising interest rates from the Fed," the chief global investment strategist for Charles Schwab said in an interview with CNBC's "Power Lunch."

Federal Reserve chair Janet Yellen has indicated the central banks first rate hike will probably come before the end of the year.

Traders work on the floor of the New York Stock Exchange.
Getty Images
Traders work on the floor of the New York Stock Exchange.

Kleintop believes now is a good time to invest in Europe, despite the ongoing Greek debt crisis.

"The Purchasing Managers Index in Europe, a great indicator of overall activity, has been rising since November. The whole issue around Greece [is] not really affecting that," he noted.

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Plus, retail sales are rising, loans look pretty good and bank earnings for this quarter are expected to be up 40 percent year over year, he added.

"Economic activity looks pretty good.… This is an environment you want to get some exposure to."

European equities, which have been performing well in recent weeks, finished flat on Friday, after the European Council approved a 7.16 billion euro ($7.7 billion) short-term loan to Greece. Earlier in the day, the German parliament voted in favor of talks on Greece's third bailout.

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Katie Nixon, chief investment officer at Northern Trust Management, thinks Greece will create uncertainty around European equities. That, coupled with valuations that she believes are "very high," is why she'd stay away at the moment.

"The market has advanced in anticipation of a lot of improvement in corporate fundamentals and earnings growth and we just haven't seen that translate into earnings growth," said Nixon, who oversees $233 billion in assets.

"We have a good tailwind for Europe in terms of the weak euro, improving their exportability. But in the meantime, we have drastically slowing global growth, especially in the global markets. So, some of their major customers are facing a slowdown."