(This is CNBC Pro’s live coverage of investor chatter on Thursday’s market volatility.) Investors will try to regain their footing Thursday, searching for signs that the economy is not deteriorating as quickly as feared a few days ago. Wall Street got some good news on that front, as new jobless claims numbers showed the labor market is resilient. Investors expect the consumer to become a bigger focus toward the end of the year after a disappointing July jobs report was one of the catalysts for the recent selloff. Stocks have fallen in four of the past five sessions. On Wednesday, major stock averages closed lower but failed to sustain early gains. Volatility could continue into September, when the Federal Reserve makes its next interest rate decision. Markets are pricing in a half-percentage-point rate cut at that meeting. Follow the latest market chatter and reactions. All times are Eastern time. 12:31 p.m.: Citi expects 50 basis-point cut in September, global economist says economy at ‘tipping point’ Citi expects the Federal Reserve to cut rates by 50 basis points in September, but there are still many questions about whether that will actually happen, said Rob Sockin, the bank’s senior global economist. The September cut will be followed by another 50 basis points in November and another 25 basis points in December, for a total of 125 basis points of cuts by the end of the year, from the current 5.25% to 5.5%, according to Citi’s forecast. One basis point is equal to 0.01%. “The U.S. team thinks we’re really starting to see signs of a recession,” Sockin said in an interview on CNBC’s “Money Movers.” The team is looking at factors such as tight credit conditions and the strain on low-income consumers. “They’re very worried about a big increase in unemployment. So they think it’s going to continue to get worse.” But Sokin’s own view is that the “jury is still out,” and they’ll have to see how the data changes over the next few weeks. “We’re at an inflection point,” Sokin said. “The economy is also moderating, and there’s a lot of reason to think the data isn’t as weak as the latest jobs report suggested. A lot of the increases in unemployment that we’ve seen this cycle are due to improvements in labor supply.” “For me, I think if the economy is still moving at a moderate pace, you’re better off starting at 25 basis points,” he added. — Michelle Fox 12:18 p.m.: LPL’s Quincy Krosby Recommends Industrial and Financial Blue Chips Quincy Krosby, chief global strategist at LPL Financial, sees a strong market. “The jobless claims numbers have eased concerns about an impending deterioration in the labor market and are now supporting a strong rally. But be careful of the forced selling earlier this week, because that typically leads to selling into the stronger parts to take profits,” Crosby said. He added that investors may need to ride out further declines before the market settles down. Crosby recommended quality dividend stocks in the industrial sector and quality stocks in the financial sector, given the prospect of lower interest rates. — Pia Singh 11:49 a.m.: Piper Sandler says Thursday’s decline could test Tuesday’s lows If it reverses during Thursday’s trading, the major stock market averages could test Tuesday’s lows and their 200-day moving averages, according to Piper Sandler chief market technician Craig Johnson. Of course, that would require a dramatic reversal. The Dow and S&P 500 are both up more than 1%, while the Nasdaq is up about 2%. — Alex Harring 10:47 am: Stocks still at risk, JPMorgan warns Market pressures aren’t likely to abate anytime soon, according to JPMorgan strategist Dubravko Lakos-Bujas. “While the recent market rally has deflated some bubbles, equity positioning and valuations remain at risk, especially if growth continues to slow and the Fed shows no urgency,” Dubravko said in a note. “Our House view (JPM Economics) is that we expect the FOMC to deliver 50 basis point rate cuts at both the September and November meetings, followed by 25 basis point cuts each time thereafter. Historically, the start of an FOMC easing cycle has coincided with negative performance in risk assets.” His comments came as stocks attempted a second straight day of recovery, with the Dow Jones Industrial Average up more than 500 points. Indeed, stocks ended the day lower after soaring higher on Wednesday.But in the long term, Lakos-Buhas expects stocks to rise. “The current rotation in stocks is, in our view, consistent with an in-cycle unwinding rather than the full-blown start of a late-cycle momentum flash,” he said. — Fred Imbert 10:02 a.m.: TS Lombard Says Correction Is ‘Contained’ The market’s recent pullback is a good time for long-term investors, according to TS Lombard. “We expect the market to recoup recent losses in the coming weeks, as economic data has not deteriorated enough to trigger discussion of a severe recession,” analyst Andrea Cicchione wrote in a note Thursday. “Our soft landing view suggests the correction is being contained.” Cicchione recommends an equal-weight long position in the S&P 500 and high-yield corporate bonds, which he said are now at more attractive entry points. The analyst said the recent selloff is a “healthy” correction that portends good buying opportunities. He noted that volatility spikes indicate that stocks tend to recover relatively quickly after the Chicago Board Options Exchange volatility Index spikes, and that the average trajectory shows that broad market indexes recoup their losses within two to three months. “To be clear, declines of 5% or more in the S&P 500 happen on average more than three times a year, and the current market crash is not something that the Fed or investors should be overly concerned about,” he said. — Pia Singh 9:57 a.m.: Portfolios should include defensive stocks, says Pivotal’s McGee Pivotal Advisors CEO Tiffany McGee said Thursday that every portfolio should include defensive positions. “It’s very exciting to be investing in these large growth stocks that have been driving market performance for a long time,” she said on CNBC’s “Worldwide Exchange.” “But having a balanced portfolio is really important.” McGehee recommended the Consumer Staples Select Sector SPDR Fund (XLP), which includes stocks like Walmart, Procter & Gamble and Coca-Cola. The fund is up about 9% through 2024. He also said the most important factor moving the market in the near term is whether the Federal Reserve cuts interest rates in September. —Alex Harring 9:07 a.m.: Evercore ISI: Market selloff marks ‘bull market buy-in correction’ on back of strong earnings Evercore ISI said concerns related to the recent market selloff are overblown, especially when compared to the political, social and economic challenges of a half-century ago. “The VIX’s rise to 65 on Monday reinforces our view that this sell-off is not the end of a bull market, but a buyable correction, and a reminder that in the long term, earnings drive stocks,” analyst Julian Emanuel said in a client note, highlighting that a better-than-expected earnings season so far is a positive sign for investors. Second-quarter earnings growth exceeded 11% and, despite signs of a slowdown in the U.S. economy, outlooks for 2024 and 2025 are relatively stable, “boding well” for the upcoming presidential election, Emanuel said. — Pia Singh 9:07 a.m.: UBS says now is the time to build exposure to quality tech stocks Solita Marcelli, chief investment officer of the Americas at UBS Global Wealth Management, said the market sell-off has found opportunities in quality tech stocks, particularly global internet and semiconductor companies. Global tech stocks are on pace to post 20% to 25% year-over-year earnings growth in the second quarter, she noted, and spending on artificial intelligence remains strong. Marcelli said she favors blue-chip companies with strong balance sheets and growing earnings, as well as those benefiting from AI. She also noted that China’s big tech companies can offer defensive features for investors. — Sarah Ming 9:07 a.m.: Peter Kraus starts buying the dips now: ‘If there’s a 10% discount, take it’ Peter Kraus, chairman and CEO of Aperture Investors, argued that it’s hard for investors to pinpoint the bottom of the market, and said he’s already started buying the dips this week. “You know my take: It’s about long-term investing. If there’s a 10% discount, take it,” Kraus said Thursday on CNBC’s “Squawk Box.” “Let’s say the stock falls 20%. Sure, it would be smart to buy it at a 20% drop, but you bought it at a 10% drop.” “It’s still a good deal,” he added. — Sarah Min
Stocks remain “at risk” so remain defensive
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