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This could create more uncertainty in market: Expert

If the Federal Reserve raises interest rates this week and simply says it will continue to be data dependent for future hikes, it will be a disaster, investment pro Steve Massocca said Monday.

"That would create uncertainty, uncertainty as to what's happening next, when the next rate increase is coming, how big the next rate increase will be. The market hates uncertainty and so I think the market would clearly trade down on that," the chief investment officer for Wedbush Securities said in an interview with CNBC's "Power Lunch."

The Federal Open Market Committee is set to meet Wednesday and Thursday and could raise short-term interest rates for the first time in nine years.

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

Massocca thinks the central bank will either not raise rates this week, or if it does it will give more detailed answers about what comes next.

Doug Sandler, co-founder and chief equity strategist at Riverfront Investment Group, said a rate hike this year would be a good thing and believes that's what the market wants.

"As long as rates don't go up to a point where they start taking the punch bowl away, which in our view you're talking about 3, 4, 5, 6 percent, the market multiples are going to go up—maybe not the day the Fed does it but within the next six, eight months," he told "Power Lunch."

On Monday, U.S. stocks closed lower, snapping a two-day win streak. The Dow Jones industrial average traded in its narrowest trading range since Aug. 18.

The market action of the last few months has led Bruce Bittles, chief investment strategist at Robert W. Baird, to turn cautious. He said the stock market will continue in a test/consolidation phase over the near term.

"Typically when a market suffers a harsh correction you go through, at least, a bottoming phase that includes several tests of the lows," he said in an interview with "Power Lunch."

"I would think something under 1,900 could be expected on the S&P before we get the all-clear sign."

That said, if the S&P breaks through 1,990 and the breadth of the market improves, he thinks a year-end rally is likely.

When it comes to where to invest, Bittles would avoid energy stocks due to the volatility in the oil markets, but likes the consumer discretionary sector.

Sandy Lincoln, BMO Asset Management, chief market strategist, told "Power Lunch" that he thinks the market is going to get more selective.

"The market is starting to discriminate by earnings. They're starting to discriminate by revenue growth and I think … that's going to be an important play over the course of the next year," he said.

He likes Acuity Brands, which he said has really good margin improvement and top-line growth, as well as "explosive" earnings. While it's not a cheap stock, with a "careful entry point" it's an interesting name, he said.

He also likes Tripoint Homes.

Disclaimer

Disclosure: Lincoln has no conflicts with Acuity or Tripoint Homes.