(This is CNBC Pro’s live coverage of Wednesday’s market chatter on the market volatility.) Whether it’s time to buy the dip or prepare for more pain ahead is on investors’ minds Wednesday as they deal with the most volatile period for stocks of 2024. The market was rebounding for a second day but investors remain on edge after Monday’s brutal sell-off. The Dow Jones Industrial Average lost more than 1,000 points to start the week, with the S & P 500 posting its worst day since 2022. On Tuesday, the following day, the major averages rebounded sharply . Many investors advise against buying the dip just yet, as they expect this volatile period to continue through October at least. Others were starting to nibble and bet on an eventual return to new highs after some sideways trading. Follow along for the latest market chatter and reaction. All times ET. 2:58 p.m.: Gabelli Funds expects July rotation into value and small-caps to continue Chris Marangi, co-chief investment officer of value at Gabelli Funds, said expects increased volatility heading into the presidential election but for the underlying rotation from mega cap tech to value and small-cap stocks to continue — particularly as lower interest rates offset economic weakness. “Increased volatility in the market is causing investors to appreciate the benefits of “value” stocks that generate significant cash flow and trade at low multiples,” said Kevin Dreyer, also co-CIO of value at the firm. “We continue to find a lot of value in small- to mid-cap stocks, which should benefit from increased M & A activity which often follows interest rates declining.” Gabelli continues to favor defensive sectors of the market that can see tailwinds from a rate cut, such as utilities, telecoms, selective real estate investment trust names and consumer staples. — Pia Singh 2:20 p.m.: Alpine Macro says recent sell-off is ‘overdone’ The risks facing the U.S. stock market after the global market sell-off aren’t as concerning as trends show, according to Alpine Macro. “We find the sell-off overdone and note that spikes in volatility are often followed by strong rebounds thereafter,” the firm wrote in an analyst note. “Our base case remains that a shift in policy corresponding with lower yields, and resilient growth, will contribute to a broadening of corporate profits which would propel a melt-up in equities.” Moving forward, Alpine sees megacap tech conditions in particular appearing “washed out.” The firm believes investors should continue with a barbell approach by “pairing select Mega Tech growth with pockets of opportunistic value including Small Cap.” “A focus on quality and profitability remains prudent,” the firm said. — Sean Conlon 1:47 p.m.: Unwinding of Yen carry trade ‘still needs to play out,’ says Comerica’s John Lynch The fallout from the unwind of the yen carry trade could still have room to run, according to Comerica Wealth Management’s chief investment officer John Lynch. “Follow through from yesterday’s climb is important, though breadth wasn’t stellar, and a few days above 5,300 can certainly help to right the ship,” Lynch said Wednesday, adding that he expects further volatility in the near term. “Today’s announcement from BOJ about a halt on rate increases suggests the damage from the unwinding of the carry trade still needs to play out, as it’s possible many hedge funds, etc. still remain offside.” The Bank of Japan’s deputy governor said Wednesday that the central bank will not raise interest rates when the market is unstable. Lynch said he views the S & P 500 to be “fairly valued” and in the 5,250 range by the end of the year. — Pia Singh 1:22 p.m.: S & P 500’s bounce ‘likely running out of steam,’ BTIG says The S & P 500 is showing signs of defensiveness in the wake of Monday’s bounce, according to BTIG technical analyst Jonathan Krinsky. “SPX could have a bit more upside, but we think tactically the bounce that began Monday morning is likely running out of steam,” Krinsky wrote in a Wednesday note to clients. “Any further strength towards 5400 we would use to trim tactical buys.” “We continue to like the action in REITs (IYR), and they are the best performing sector over the last one and three months,” he continued, noting that the ratio of the S & P and the iShares U.S. Real Estate ETF climbed to highest level since January. — Sean Conlon 1:03 p.m.: Sell-off doesn’t mean AI trend is gone, says Carnegie Investment Counsel’s Greg Halter Stock market volatility and a big drop for growth stocks don’t mean that the underlying forces of the economy have gone away, said Greg Halter, head of research at Carnegie Investment Counsel. Halter told CNBC in an interview Tuesday that data points like shipping rates and gasoline demand are signs that the economy still has some underlying strength. He also said that investors could look at power infrastructure stocks like Eaton and Vertiv as a different way to bet on the AI trend that powered much of the market rally before this summer weakness. “That’s another way to play it without saying ‘hey, I want to own Nvidia.’ There’s many other things out there that aren’t as growth-y, but these are long-term trends that are happening that likely aren’t going to change,” Halter said. — Jesse Pound 11:55 a.m.: DoubleLine’s Sherman sees a ‘firm landing’ with imminent rate cuts Jeff Sherman, DoubleLine deputy chief investment officer, thinks the Federal Reserve will reduce interest rates at every policy meeting for the remainder of 2024 to create a so-called firm landing. “The economic data has been weakening … I’m calling kind of a firm landing at this point, and I think the Fed is going to deliver cuts, but I’m just not sure that it’s exactly as aggressive as the bond market has repriced in the last few days,” Sherman said on CNBC’s ” Money Movers ” Wednesday. Sherman said it’s a coin flip if the central bank will cut rates by 50 basis points or 25 basis points at the September meeting. Some have advocated for a 100-basis-point rate cut after the global market sell-off. “I think it’s going to be, once again, data dependent. And I don’t think the economy fell out of bed just because of the jobs report,” he said. — Yun Li 11:43 a.m.: Economic data not ‘bad enough’ to justify sell-off, TS Lombard says It’s no surprise the stock market is bouncing back after Monday’s sell-off, according to TS Lombard. “The market has been hypersensitive to negative economic surprises because of the extent to which GDP growth and earnings expectations have been ratcheted up over the course of this year,” strategist Andrea Cicione wrote in a note. That said. “the economic data aren’t bad enough to support the magnitude of the sell-off.” “We add longs in the equal weight S & P 500 and CCC US credits at what are now more attractive entry points,” Cicione added. — Fred Imbert 11:04 a.m.: Oakmark’s Bill Nygren remains bullish on value Bill Nygren, Oakmark portfolio manager and CIO, is bullish on a set of value names as the economy chugs along. “I think it’s fair to say that you do need a good economy for the banks to do well, for the auto-related companies to do well. But I don’t think it needs to be anything incredible, and the levels we’re at today just don’t seem that far above trend.” Nygren emphasized that companies, such as General Motors , are aggressively repurchasing shares and that will drive prices higher towards fair value companies in the market. Companies like GM and Citigroup have gotten cheaper after the recent market correction, he added. The Oakmark Fund’s top 10 holdings include Alphabet, financials Citigroup and Charles Schwab, General Motors and Deere — each of which Nygren is bullish on over the next five to seven years. — Pia Singh 10:48 a.m.: Strategas is ‘hesitant to get bearish’ despite expecting further volatility ahead Increased volatility in the market will be the new normal, according to Strategas. “As we believe that inflation and inflationary expectations are reverting to the mean and that the pace of globalization is in the process of slowing markedly, it seems reasonable to assume that the “great moderation” that started in the early 1980s is over,” strategist Jason Trennert wrote in a Wednesday note. But “with expectations for both GDP and earnings robust in 3Q and long rates lower, we are hesitant to get bearish despite recent volatility,” he said, adding that the highly elevated levels in the CBOE Volatility Index are often associated with buying opportunities. Trennert also noted that the S & P 500 trades in a 27% range in any given year, on average, and that the broad-market index has so far this year traded in a 17% range. This suggests “further market gyrations” ahead — particularly amid ongoing domestic and international political tensions. — Pia Singh 10:15 a.m. U.S. stocks to rebound while Japanese markets stay subdued, Citi says It’s possible the U.S. stock market sees a quicker recovery than its Japanese counterparts after the recent sell-off, according to Citi. “We find that US equities are apt to rebound even as international equities (including Japan) stay subdued,” strategist Alex Saunders wrote. This is due in part to the bank’s expectation that the yen will remain strong, thus hurting Japanese equities. This month, the yen is up more than 1.8% against the U.S. dollar — despite a 2% decline on Wednesday. “Contemporaneous returns are poor in a high volatility environment, but the model is more positive on forward returns for US stocks and fixed income in general,” Saunders said. — Fred Imbert 9:52 a.m. Barclays scooping up tech Emmanuel Cau, head of European equity strategy at Barclays, moved tech to overweight now that the sector is more than 10% off the all-time highs it reached just last month. The strategist expects continued volatility ahead, citing seasonal weakness. But, with earnings remaining resilient, and the likelihood of a Fed rate cut serving as a backstop, Cau said he expects the economy is cooling, rather than headed for a recession. “Summer markets are notoriously tricky to navigate, and the latest bout of volatility may have a knock-on effect for days/weeks to come, as degrossing may not be over. Price action may thus stay erratic, while US elections will likely keep markets on their toes into the fall,” Cau wrote in a Tuesday note. “However, everything put together, we find the recent indiscriminate selling exaggerated and look to selectively buy the dip. We move Tech to OW post the 16% pullback since mid-July.” “We buy tech on dip,” Cau said. — Sarah Min 9:45 a.m. Lots of reasons to like stocks long-term Nick Colas of DataTrek Research said there are “plenty of reasons” to like stocks after Monday’s dip “The Fed has plenty of room to cut rates,” wrote Colas in his morning note. “The dollar and stocks just passed a global stress test. S & P earnings/margins are robust, and the former is at record highs. Volatility should peak this month. We respect the tape’s cautious message but remain bullish longer term,” he added. -Jeff Cox 9:33 a.m. Rally for dollar could be ‘limited,’ strategist says The dollar is rising against the yen again on Wednesday, but that doesn’t mean the so-called carry trade is over, according to Scotiabank. Shaun Osborne, the firm’s chief foreign exchange strategist, described US dollar trading as “lumpy” in a note to clients and added that their may be more unwinding of Japanese yen positions still to come. “The USD can regain a little ground for now but scope for strength remains limited while the economic and market outlook remains uncertain. The S & P 500 is close to 10% off its recent peak, equating to a decent correction but I think the carry trade shake out may have further to run given the still significant short JPY positioning in the market (and perhaps still elevated earnings expectations in parts of equity land),” the note said. The ICE U.S. Dollar Index was up 0.2% to 103.18 shortly before the stock market open in New York. “DXY gains may extend to the 104 area in the short run but the underlying trend retains a soft undertone and rallies are likely to attract better selling interest,” the Scotiabank note said. — Jesse Pound 8:59 a.m. Piper Sandler chart analysts say bet on an eventual S & P 500 rebound to new high of 5,800 The chart analysts at Piper Sandler are not worried about the recent pullback and said investors should “roll with the changes” that have occurred in the market in the last month, like the rotation to smaller stocks. Craig Johnson and Scott Smith said in a note Wednesday that investors should expect volatility spikes like this and historically they end around October. The two cite a steepening yield curve, the testing of key market support levels and relative strength of smaller stocks as reasons to remain bullish. They maintain their S & P 500 year-end target of 5,800, which represents a nearly 11% rebound from Tuesday’s close and a new record for the benchmark Piper found some interesting data to support their bullish thesis. During this recent market pullback, the Cboe Volatility index more than doubled to above 30 and the S & P 500 still managed to stay above its 200-day moving average. Since 1991, when the VIX spikes above the 30 level and the S & P 500 stays above its 200-day moving average, it tends to rebound after three months following some sideways trading. Basically it means the recent panic didn’t damage the market’s long-term trend. The firm says investors should embrace the rotation to financials and industrials, along with smaller stocks. “The Fed will likely cut interest rates at least once later this year, which has historically benefited Small and Mid-cap companies,” stated the note. — John Melloy 8:26 a.m. ‘Worst might not be over,’ UBS says There’s more pain to come, according to UBS. Strategist Shahab Jalinoos said elevated signals in a number of indicators suggest the market selloff is not yet over, citing, for example, high levels in Wall Street’s “fear gauge.” The CBOE Volatility Index (VIX) was last around the 23 handle. “We suspect the level of anxiety that there is more damage possible in what may be perceived as a thinner liquidity summer environment is likely to keep many twitchy,” Jalinoos wrote in a Tuesday note. 8:20 a.m. It’s not yet safe to get back into stocks, Citi says Stocks have recouped some of their losses during Tuesday’s session, but that doesn’t mean it’s safe to go back in, according to Citi. “Positioning in SPX and Nikkei was not overly stretched to begin with, but at this stage only around one-half of the recent run-up has been pared back as of Friday. For NDX and Kospi, positioning has been reduced by less,” strategist Dirk Willer wrote on Tuesday. “The positioning clean-up is not far enough advanced yet to make it safe to re-enter the equity market, in our view,” he said. 7:59 a.m. ‘Bad news’ is back to being bad news, Wolfe Research says Bad economic news is back to being bad news for stocks, according to Wolfe Research. For much of this year, stocks reacted positively to signs of economic cooling for the bulk of this year, as investors took the reports as signs the Federal Reserve could soon cut interest rates. After last week’s disappointing July jobs report, however, investors are concerned the economy is now cooling too quickly, and could be headed toward a recession. “Our sense is, a weaker-than-expected ISM Manufacturing and payrolls report last week has shifted the narrative back to ‘bad news’ being ‘bad news’ as investors start to question whether a few Fed rate cuts will avert a broader slowdown,” Chris Senyek, chief investment strategist at Wolfe Research, said in a Wednesday note.
Top investors on the market volatility: Oakmark’s Bill Nygren’s buy list
