Futures Now

Stocks are doing something they haven’t done since the financial crisis: Strategist

Here's what will drive the market higher: Strategist
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Here's what will drive the market higher: Strategist

All major indexes are sitting at record highs, but for those looking for what could cause the next downdraft, one strategist says they are missing the big picture.

"I think if you talk to investors and you listen to the narrative, it's all about one macro risk point to another," Joe Zidle said Tuesday on CNBC's "Futures Now." "Yet the markets climb higher and people are asking how can this be. Well the simple answer is we are seeing earnings reflate, not only in the U.S. but all around the world in a way that we haven't seen since the days prior to the credit bubble," which was followed by the financial crisis.

In other words, earnings are going to drive the market higher. Consequently, the Richard Bernstein Advisors portfolio strategist encourages investors to get into cyclical sectors like tech, financials and consumer discretionary given that he believes earnings are going through a reflation period.

Cyclicals are the best bet in this type of environment, according to Zidle, because they are "most sensitive to changes in that profit cycle."

As a result, the strategist sees these cyclical sectors staying strong until the end of the year. So far, the tech sector has surged 22 percent in 2017, with financials picking up steam to rally more than 8 percent so far this year. Consumer discretionary stocks have also climbed almost 10 percent year to date.

Better-than-expected earnings are a big factor in the market rally this year. The is up about 12 percent, the has risen 20 percent and the Dow, which closed at another all-time high on Tuesday, has surged 13 percent.

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