The stock market looks ready to break out to the upside heading into next year, Wells Capital Management's Jim Paulsen told CNBC on Wednesday.
The firm's chief investment strategist said on "Squawk Box" that there are a number of factors that should lead stocks higher, including a rosier outlook for earnings as the third-quarter reporting season gets underway this week.
"I think we're going to maybe find out we are finally turning northward on earnings momentum," he said.
Wall Street saw a major sell-off on Tuesday, with health care leading the way lower on concerns about more regulations should Democratic nominee Hillary Clinton win the presidency. The S&P 500 fell 1.2 percent to 2,136 — breaking just below its 100-day moving average.
Despite Tuesday's slide, Paulsen said he's getting more bullish on the market. After some apprehension, he turned positive again on stocks after the February lows.
Paulsen said he hopes the Federal Reserve ends the waiting game and hikes interest rates before the end of the year. "I think we'll get comfortable with it and more on."
The central bank meets next in November, but the market sees December as the more likely gathering for a move. Policymakers increased rates in December 2015 for the first time in more than nine years.