Wells Fargo, JPMorgan strategists break with Goldman's gloomy stock outlook

Money Graph

Wall Street strategists said Wednesday there are still gains to be found in equity markets, even as Goldman Sachs said it no longer saw a reason to own stocks.

Goldman Sachs on Tuesday downgraded European and Japanese stocks and upgraded U.S. equities to neutral over the next 12 months. The investment bank said it is not comfortable taking equity risk with few sustainable signs of a growth recovery and valuations near peak levels.

But JPMorgan Funds Global Market Strategist Samantha Azzarello said Wednesday she disagrees with Goldman's outlook.

"There's less upside maybe going forward, but we do expect the market to grind higher, and we think there's more returns to be had. You just have to be increasingly selective," she told CNBC's "Squawk on the Street."

Azzarello said there is strength in the U.S. economy, but easy money and buybacks will no longer be enough to drive markets higher. Ultimately, earnings need to pop in the second half of the year, she said.

S&P 500 earnings for the first quarter, excluding energy, are on track to end the reporting period flat from the same period last year.

For the time being, JPMorgan Funds is focused on sectors exposed to the consumer, including consumer discretionary, health care and technology, Azzarello said.

Sameer Samana, global quantitative strategist for Wells Fargo Investment Institute, said Wednesday he too still sees opportunity for growth in stocks.

"When you look at the earnings season we just got out of, if you look at the top line, there wasn't a lot of earnings growth, but when you get underneath the hood, you look at places like technology, consumer discretionary, there's still a lot of earnings growth to be had," he told "Squawk on the Street."

Investors need to be more selective, he said. He advised against investing broadly in consumer stocks following a bruising earnings period for retailers, but said there is still strength in online shopping names like Amazon.com .

JefferiesAnd the Best Place to Work in the global financial markets 2016 is...

Register for Financial Markets News Alerts