US Markets

Avoid low-growth stocks in case of a rate hike, strategist says

Monday morning stocks

With President-elect Donald Trump setting a new direction for the economy, an interest rate hike in December could be harmful to low-growth businesses, strategist Steven Rees said Monday.

Rees, global head of equity strategy at JPMorgan Private Bank, said Trump's plan could be a major hurdle to bond proxies, or companies in industries like telecommunications and utilities, as well as parts of the consumer staples sector.

"The companies that don't really grow that pay a high yield, those are the companies we want to avoid here," Rees told CNBC's "Squawk Box."

Still, considering Trump's promises for significant tax reform, repatriation of capital and rebuilding infrastructure nationwide, Rees said there may be good opportunities for upside regardless of how quickly rates rise.

"The market is definitely focusing on the pro-growth, positive parts of the plan," said Rees.

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Economist Steven Ricchiuto had a slightly more cautious view of December's expected hike. He said the Federal Reserve could overreact and raise rates too quickly in response to the president-elect's massive spending proposals.

"All I know about these moves is they tend to move quicker, they tend to move further than anyone anticipates, and they create a very, very good opportunity on the other side, and they do take [an] economic hostage along the way," the chief U.S. economist at Mizuho Securities told "Squawk Box."

The economic hostage would be the U.S. budget deficit of $616 billion, which Ricchiuto said could affect long-term interest rates if Trump adds billions to it through his proposed infrastructure spending.

"I'm going to accumulate cash, see what happens with the Fed in December, see what they tell us about 2017," Ricchiuto said.