US Markets

Dow 20,000 will bring in more cash from retail investors, expert says

Closing Bell Exchange: Does anything change after Dow 20K?

Dow 20,000 is a big deal to retail investors, who will continue to buy into the market after the blue-chips index hits the milestone, investing expert Rob Morgan told CNBC on Tuesday.

The Dow Jones industrial average came within striking distance of 20,000 on Tuesday, closing about 25 points away.

"So many retail investors have had huge amounts of cash on the sidelines, really for years now, and I think it is drawing them in," the chief investment officer for Sethi Financial Group said in an interview with CNBC's "Closing Bell."

Keith Bliss, senior vice president at Cuttone & Company, agrees that people are optimistic thanks to the promise of tax reform and deregulation when President-elect Donald Trump takes office.

"People are primed to do business. They can't wait for 2017 to get started," he told "Closing Bell."

He believes fundamental factors, as well as seasonal pressures to the upside, will push the Dow above 20,000, likely in Wednesday's session.

For those looking for a place to put money to work, Morgan would focus on small-cap stocks, which should be helped by rising interest rates and a stronger dollar. He specifically likes financials, materials, telecom and technology.

Nelson: Investors should walk away from consumer staples

David Nelson, chief strategist at Belpointe Asset Management, also likes financials and suggests for those who have completely missed the rally to find a way to scale in at some point.

"You roll back a lot of regulatory overreach that we've had over the last eight years, this sector looks very attractive," he told "Closing Bell."

However, he would completely avoid consumer staples.

As for the Dow being within reach of 20,000, Nelson said he's excited about it.

"It increases the animal spirits. It's an important event. It kind of marks how far we've come," he said.

For David Lebovitz, global market strategist at JPMorgan, Dow 20,000 is halfway to 40,000.

"Over the long run, stock prices rise," he said. "As a long-term investor, you need to look through some of this noise and focus on the fundamentals for the long run."

He told "Closing Bell" he likes financials, but said utilities, telecom and consumer staples will all come under pressure from rising rates.

Last week, the Federal Reserve hiked rates and indicated it may have three more increases in 2017.