Forget the Fed, this will drive stocks: Experts

What should markets focus on next week: Pros

Markets are fixated on Fed policy, but two experts said investors should forget the U.S. central bank for now.

Anticipation of a Fed liftoff from near-zero interest rates is "already built into the markets," said Hugh Johnson, chairman and chief investment officer at Hugh Johnson Advisors. Instead, he believes guidance for next year's corporate earnings will likely give a better indication of where markets will go from here.

"Trying to make the case for anything but low single-digit earnings growth in 2016 is very difficult. And if you can't do that, you cannot make a case" for a significant stock rally, Johnson said Friday on CNBC's "Power Lunch."

Traders work on the floor of the New York Stock Exchange, as a television screen displays Federal Reserve Chair Janet Yellen speaking on June 17, 2015.
Lucas Jackson | Reuters

The unofficial start of earnings season came Thursday, when Alcoa reported disappointing results after the bell. A string of key companies will report quarterly earnings in the coming weeks, with many giving hints about their outlook for next year.

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Johnson said he will focus on 2016 guidance, as lower earnings projections could limit upside for stocks well into next year.

While guidance will be crucial, valuations will drive decisions for Nancy Tengler, senior vice president and chief investment officer of Heartland Financial. She has focused on large-cap stocks that have fallen to cheaper entry points.

Specifically, Tengler likes big biotechnology and pharmaceutical names. Her firm recently bought into Amgen and Gilead Sciences, which have suffered with the rest of the sector amid drug pricing concerns.

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Amgen and Gilead have fallen 1 percent and 3 percent in the last month, respectively.