US Markets

'Healthy' pullback an 'attractive buying opportunity,' say strategists

Orlando: This correction should be a buying opportunity

Investors shouldn't be spooked by Tuesday's stock market tumble, instead they should look at it as a buying opportunity, experts told CNBC.

Stocks posted their worst day of 2017, with the Dow Jones industrial average closing more than 200 points lower. Financials, which have enjoyed a nice rally since President Donald Trump's election, plunged more than 2.5 percent.

However, Phil Orlando believes things are still stacking up nicely for stocks, despite the 2 percent to 3 percent drop in the over the last couple of weeks.

"We still think health care is going to get through. We still think that tax reform is going to get through," the chief equity strategist for Federated said in an interview with "Power Lunch" on Tuesday.

"The bigger picture is this 2 to 3 percent correction should be an attractive buying opportunity."

Investors have been banking on Trump's promises of tax cuts, deregulation and infrastructure spending. However, his administration has indicated that health-care reform is the first priority.

A vote on the House Republican's Obamacare replacement plan is expected on Thursday. It has detractors on both sides of the aisle, and on Tuesday, Trump warned Republican lawmakers that many of them could lose their seats next year if they vote against the bill.

This is the 'Chicken Little' correction: Belski

Brian Belski, chief investment strategist for BMO Capital Markets, said in a market that has been fueled by confidence, it's not surprising that people will start to take profits when they see a negative headline.

"At the end of the day, stocks are rarely linear for long and it's been very healthy to see this type of a pullback," he told "Power Lunch."

"Days like these afford a disciplined investor with better entry points to buy their favorite names."

Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, also isn't convinced the near-term rally is over.

What's happening right now is "just trading," he told "Power Lunch."

"This is not some complete rejection of the new administration's proposals, many of which are pro-growth, many of which may be implemented … to help in 2018, 2019, 2020. This is just a little short-term profit taking," Wren said.

Ultimately, he's anticipating the year will likely end flat to slightly higher, peaking midyear and then fading in the second half.

That's when the market may start to worry about the potential for higher inflation and the possibility of the Federal Reserve getting behind the curve on rate increases, he explained.

Financials hit

While financials took a big hit on Tuesday, their run isn't necessarily over, according to Jeffery Harte, principal at Sandler O'Neill.

While the timing of Trump's proposals may be weighing on the sector, he still believes the environment is a good one for banks.

"I also don't necessarily think you need to rush in today. It's going to be kind of volatile," he said in an interview with "Power Lunch."

Harte would also like to see some hard economic numbers.

"We'd like to see loan growth accelerate again at the banks. The tone out there is that that will happen but we'd like to actually see that play out," he explained.

Meanwhile, not all financials should be lumped together, warned Charles Bobrinskoy, head of investments at Ariel Investments.

He believes regional banks, which have underperformed since December, were overpriced.

"The average regional bank got to 17, 18 sometimes 20 times earnings. Regional banks have traditionally traded for 11, 12 times earnings. So they just got too expensive," he told "Power Lunch."

However, lower tax rates and less regulation will be good for business and profits — and earnings matter when valuing stocks, Bobrinskoy said.

"I still feel good about the economy, which is getting better. A little bit of inflation is probably pretty good for stocks and we're absolutely seeing signs of a little more inflation," he said. "So there's a lot to be happy about, but just don't get ahead of yourself when it comes to regional banks."

— CNBC's Brenda Hentschel and Fred Imbert contributed to this report.