Top Stories
Top Stories
US Markets

Citi's chief U.S. equity strategist betting on financials, energy

Sector insight on energy, financials

Energy stocks and financials led the market rally Wednesday and are probably going to go even higher, Citigroup's chief U.S. equity strategist told CNBC.

The call on energy is all about oil prices.

"Our firm view is we're going to see low $60s by end of next year and the stock prices have more upside if that's the case, especially when we look at the valuation of the drilling companies," Tobias Levkovich said in an interview with "Power Lunch."

U.S. crude futures ended 2.34 percent higher Wednesday, at $49.35 per barrel, its highest level since June.

When it comes to banks and diversified financials, there are three reasons he is positive, Levkovich said. For one, he expects the yield curve to steepen.

Plus, "the valuation work that we do suggests these stocks are still likely to go higher," he added.

Third, he anticipates an improvement in earnings revision momentum.

On Wednesday, the SPDR S&P Bank ETF (KBE) was up more than 2 percent and was on track to post its best day since August 5, when it gained 3.21 percent.

— CNBC's Fred Imbert contributed to this report.