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Reasons to be optimistic on stocks are fading, says portfolio manager

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Portfolio management firm QMA is pulling back from stocks as it sees fewer signs to hold out hope equities will put up gains in the near term.

QMA portfolio manager Ed Keon said Tuesday the market this year has demanded investors make a lot of tactical moves. The firm's latest is to underweight stocks and allocate more capital to bonds, real estate and cash.

Keon made his comments shortly before the Dow Jones industrial average fell more than 100 points, as U.S. oil remained stuck near $40 a barrel and investors appeared unimpressed by Japan's announcement of a $132 billion stimulus plan.

QMA had overweighted stocks on the view that corporate earnings had bottomed in the first quarter and would later recover, Keon said. While second-quarter earnings have improved, low oil price headwinds that dinged first-quarter results are once again kicking up, he said.

Add in last week's disappointing read on second-quarter U.S. economic growth, and the fundamental case for improved stock performance has weakened, he said.

"I think you're starting to see revisions to earnings on a downward direction for the second half of the year. Not that they won't be up a little bit from where we were a year ago, but that big reason, that fundamental reasoning to get more optimistic in the post-Brexit era, I think that's largely dissipated," he told CNBC's "Squawk on the Street."

The trend of GDP growth is close to 2 percent, but the underlying data thus far do not support that outcome, Keon added.

Wall Street gets an important read on the economy when the Labor Department issues its July jobs report Friday.

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Bruce Kasman, chief economist at JPMorgan Chase, said he still believes the U.S. economy will grow 2 percent this year. He added that he doesn't think the renewed slide in oil prices — and the impact on U.S. drillers — has produced a significant drag on growth yet.

However, he said corporations could still struggle to expand profits even if Friday's jobs report comes in strong. That is because employers are seeing wages tick up and the unemployment rate fall while productivity remains weak.

"That's good for labor income, and it's showing up in the consumption numbers, but it's not good for the bottom line for corporates, and it's been one of the central problems we've been facing," he told CNBC's "Squawk Box" on Tuesday.

If productivity growth does not pick up, the economic performance will fall over time as corporations struggle to return to profit growth after an earnings recession, Kasman said. He noted that weak business investment played a part in the lower-than-expected GDP reading.