Finance

An earnings season that delivers will play an integral role in whether the market can maintain all-time highs, according to Crossmark Global Investments’ Victoria Fernandez.

The chief market strategist believes Wall Street is completely discounting second earnings expectations right now, and that leaves little room for disappointments when the season kicks off this Monday.

“Earnings could be volatile,” she said Friday on CNBC’s “Trading Nation. “

But according to Fernandez, a long-term bull, a setback would likely be short-lived.

“We do think that the trend will be higher in the markets,” she said. “[Investors] feel like the Fed has their back, and so the markets are continuing to run on that.”

On Friday, the major indexes saw all-time intraday highs and fresh record closes. Since the beginning of June, the Dow, S&P 500 and Nasdaq have jumped 10%.

Fernandez, who’s responsible for $5 billion in assets, acknowledges risks remain — including the Federal Reserve surprising Wall Street by deciding not to cut rates later this month. She’s also closely watching developments tied to the U.S.-China trade war and potential new tariffs on Europe.

Yet, Fernandez is fully invested.

“We take a longer-term outlook, so we’re not trading on the headlines that come out each day,” she added. “We have not taken an extremely cautious approach by keeping funds in cash.”

But Fernandez isn’t buying stocks in one broad stroke. She’s being selective and is particularly partial to core value names in order to brace for near-term market volatility. She gives McDonald’s and Intel as examples.

“We’re continuing to find companies that we feel like have maybe been a little beaten down and have quite a bit of upside potential going forward over the next two, three, four quarters,” Fernandez said.

Disclosure: Crossmark Global Investments owns shares of McDonald’s and Intel. Victoria Fernandez owns McDonald’s in her personal portfolio.

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