The sector that could take the market to all-time highs

by Annie Pei

The S&P 500 is close to breaking through all-time highs, and traders are speculating which sector will give the market the boost it needs.

Erin Gibbs, equity chief investment officer at S&P Global Market Intelligence, is focused on bigger sectors as she believes smaller sectors hold too little weight to push the market higher. While info tech (XLK) is by far the largest sector, making up 20 percent of the S&P 500, Gibbs believes the outlook is better for the second and third largest, financials (XLF) and health care (XLV), respectively.

More specifically, Gibbs believes that health care will become significant. Not only is that sector the third largest in the broader market, but according to Gibbs, health care's valuations put it in a great place for expansion.

"[Health care is] actually trading well below its average three-year valuations as well as below the market valuation," she said Tuesday on CNBC's "Power Lunch." "So even if we just get another 5 percent of a valuation expansion, let alone some of the most attractive EPS growth, we can really see the market push higher."

Gibbs also believes that financials can push the market higher, but the sector boasts richer valuations as compared to historical averages, which still leaves health care as her top choice for a market push.

The S&P 500 rose as high as 2,119 on Tuesday, putting it mere points away from its peak level.

Manhattan Venture Partners' chief economist, Max Wolff, also appearing on "Power Lunch" agrees that health-care stocks look decent, yet says financials "are the sleeper hit" given the chance for the Fed to raise rates and thus improve the lending business.

The politics behind financial regulations lead Wolff to consider health care the "safer bet" between the two, but the financials are more likely to see a runaway rally.

In general, however, Wolff is no bull on the market, given his perception that valuations are high and the economic picture is deteriorating.

Courtesy of cnbc.com