Wall Street's second biggest bull is predicting a market comeback is in the works.

Despite investor skittishness over Caterpillar CEO comments suggesting an economic slowdown and rising Treasury yields signaling inflation risks, Federated Investors' Phil Orlando contends stocks will return to record territory this year.

"This is the best earnings season we've seen in the United States in seven years and, frankly, the fourth consecutive really strong quarter," the firm's chief equity market strategist said Tuesday on CNBC's "Futures Now."

His thoughts came as the Dow gave away early gains to ultimately close down 424 points, a 1.74 percent loss. Premarket prices were down Wednesday.

"The concern, the infatuation if you will, with the 3 percent benchmark 10-Year Treasury yield is taking focus away from strength in corporate earnings," Orlando said. "Five percent is the inflection point. That's the point that where we start to get concerned. And, we're still 2 percentage points away."

Orlando, who believes the will rally 15 percent to 3,100 by year-end, concedes it could take some time. Only UBS' Keith Parker has a higher target for the S&P 500 — 3,150.

"You have a choppy year right now. We think it was going to be a barbell year. So far, that's played out," Orlando added.

According to Orlando, fundamentals indicate a sharp market rally in the fourth quarter — citing more clarity around Federal Reserve and Washington trade policy, the Mueller investigation and midterm elections.

Once the market begins to regain its footing, he said, energy, financial services and industrial stocks will lead the way.

"The reality is that value stocks like these categories have dramatically underperformed the growth stocks by more than 20 percentage points over the last year. There is going to be a reversion of the mean," Orlando said. "There is a lot of catch-up that needs to happen between now and the end of the calendar year."