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Scott L. Wren is a senior equity strategist with Wells Fargo Advisors. Previously he was a senior equity strategist with A.G Edwards.

Harlan Levy: What are your thoughts on the combination of fourth-quarter Gross Domestic Product newly revised down to 2.4 percent, initial jobless claims up, and consumer confidence up, among other new reports?

Scott Wren: I think that it's no surprise that GD came in at 2.4 percent. We had a huge inventory build in the third quarter which is how we got to 4.1 percent for that quarter. And basically there was an inventory adjustment in the fourth quarter, and that's how we got down to 2.4.

It tells me that this modest-growth economy that we've been living with and will be living with for a lot longer is still intact. Our GDP estimate for this year is 2.4 percent, which is below the consensus.

A lot of people made the mistake of assuming that after the third quarter reading and then initial fourth quarter reading on GDP that we were going to see a new accelerated rate of growth. But they were too overly optimistic, The Federal Reserve is also too optimistic. They're looking for growth over 3 percent this year, and I think a lot of other investors in the market were too optimistic as well.

Q: What do you see for jobs in light of the last initial jobless claims number going up?

A: You're going to see initial jobless claims over the course of the next six to nine months move down to around 300,000 from 340,000 to 350,000 right now.

That will show improvement, and we expect slow improvement in the labor market. I think you'll see unemployment by the end of the year down to 6.2 percent.

Also, you'll see companies' earnings growth around 6 or 7 percent this year. Those things are all in line with a modest economy.

We just boosted our target for earnings in the S&P 500 from 113.50 up to 118. Our target for the S&P 500 went up from a range of 1,850 to 1,900 last August to a range of 1,975 to 2,025. We feel that we're going to see some better investor confidence and some better business and consumer confidence as well, which will help valuations.

The growth that we have may be slow but it's dependable. Investors are coming to realize that. They're also realizing that, despite the fact that it's reducing its monthly bond purchases, the Fed, is still going to be very easy for a very long period of time, and we're nowhere near the point where it will be raising the fed funds target rate.

Q: Is housing still in good shape?

A: There are headwinds from higher interest rates, and first-time buyers are having trouble getting credit. Plus there's still a lack of inventory in the market, and that's driven prices higher. Affordability has dropped. It's still reasonably good by historic standards, but the combination of higher rates and higher prices have made affordability fall back.

Housing prices will go up this year, but nothing as they did over the course of last year - over 13 percent. The inventory situation is likely to improve. You're going to see housing be a positive contributor to economic growth. Housing will be fine but not great.

Q: What effect might the Ukraine crisis have?

A: It's not like what goes on in Ukraine will cause a disruption in oil or energy. The U.S. has very little trade with Ukraine. It has a very small economy. I don't think it will have any sort of big impact. It may be a more localized traumatic event, but it's pretty clear that the U.S. is not going to get too involved in this, other than aid or maybe participating in sanctions that the U.N, might impose. The U.S. will stay on the fringes. So I don't think what happens in Ukraine will have a huge effect on the markets. It has a very small potential to flare up into something that would heighten global tensions between Russia and the U.S. or the European Union.

Q: The latest economic forecast from the Congressional Budget Office predicts sluggishness is here to stay for a long time, with lower personal earnings, less business investments and lower profits, GDP growth no more than 2.1 percent, job gains of less than 70,000 a month, and high interest rates. What do you think of that?

A: I don't think we're going to see high interest rates. I think job gains will be stronger than that. I thing GDP growth will be a little bit stronger than what it predicts. I think the CBO estimates are not quite optimistic enough.

You're just going to have a slow economy, but it will be moving in the right direction. That's just the way it's going to be. That could be a multi-year situation.

As for job gains Job gains, they will be better than 70,000. More like in the 100,000 to 150,000 range seems reasonable to me.

Q: The durable goods report was stronger than expected. What does that say about manufacturing?

A: The headline number was down less than expected. The number I look at is non-defense capital goods orders, excluding aircraft. That was expected to be down, and it was up 1.7 percent, and that's a good gauge of business capital spending. That's a good sign.

We're looking for better capital investment from businesses through this year. That would be in line with our expectations. But that's been a very volatile number over the course of the last couple of years, but overall this year it will show an improved capital spending climate.

Q: Are stocks getting ahead of where they should be?

A: They are a little ahead of themselves. They're reacting to Fed Chairman Janet Yellen being a dove. She'll support very easy money policies, and with the economic data not being strong, that's just giving the market confidence that interest rates are not going to move higher any time soon.

It's "don't fight the fed." The Fed is giving money away, and it wants stock prices to go higher and house prices to go higher, and that's what's happening.

At 2,000 we're at the midpoint of our S&P 500 target, so we're looking for good things out of the market. Things are moving in the right direction. Valuations are not stretched. The economy is moving in the right direction. Earnings are moving in the right direction. The path of least resistance is up.

Q: What stocks do you like, and which sectors would you avoid?

A: The sectors we like the industrial sector. We like the technology sector and the consumer discretionary sectors. Those are the places to be. We want our clients to be assertive but not aggressive. We want them overweighting those sectors that are sensitive to the ebb and flow of the economy. And we don't want them hiding in the defensive sectors like healthcare, utilities, consumer staples. We want them to participate in the continuation of the recovery here and abroad.

Q: What do you think of the global picture?

A: I think Europe is going to do better. The emerging economies' growth rates are likely to slow.

In rankings, we like the U.S. stock market best, followed by the international developed markets, and then emerging markets below that. We're not expecting great things out of the emerging markets. We're more cautious.

Source: Wells Fargo Advisors' Scott Wren: 2014 GDP 2.4%, 6.2% Jobless, Earnings Up 6-7%