"Its' a very difficult starting point," Kostin said. "It doesn't mean the market can't go higher but the probability is you would get a lower valuation."
There are a few "rare gems" in the market, though, that have outperformed tough market conditions.
"You have a couple of companies where there is expansion in margins, which is very rare," Kostin said, pointing to companies like Honeywell and Cisco, with above-average dividend yields and dividend growth. "Those stocks ought to do better," he said, adding that domestic-focused companies might also outperform in a tough environment.
Wage inflation and a strong dollar have been key factors during earnings season. Retail results are off to a lackluster start with Macy's reporting Wednesday. The company lowered its sales and earnings outlook after posting its fifth straight quarter of decline. The stock is down nearly 20 percent this week.
Industrial companies also count wages as a significant part of the cost structure, and are seeing the effects of wage inflation in their margins, leading to some negative earnings revisions, Kostin said.
But other sectors stand to benefit from what's the hurting consumer discretionary sector.
"The beneficiaries would be from technology where labor costs are a relatively small portion of their sales," Kostin said.
Still, not all tech companies had a great quarter.