Markets lower as September gloom continues

Yahoo Finance’s Brian Sozzi and Alexis Christoforous break down today’s market action with Invesco Global Market Strategist, Brian Levitt.

Video Transcript

ALEXIS CHRISTOFOROUS: It was sort of a weird and wonderful night. All right. Let's get back to the markets now and this early sell-off with Brian Levitt of Invesco Global Market.

Brian, good to see you as always. So I guess Friday wasn't the bottom. How much further do you think this market has to go before we regroup?

BRIAN LEVITT: I don't think we have that much further to go. I mean, we're-- we're sort of in a correction area already for some of the highest-flying names in the market. And I think, you know, hindsight's always 20-20, but a correction could have been expected.

We were-- we were a bit overbought. And we had a lot of policy uncertainty coming as we entered the fall. And September tends not to be a great month for markets for what-- for whatever that's worth.

So, you know, it was-- it was bound to happen. I think these types of corrections are healthy. You know, I wouldn't believe that we have significantly further to fall here.

BRIAN SOZZI: Brian, are you bullish on the market for the rest of the year?

BRIAN LEVITT: I am. And that doesn't mean, Brian, that there's not gonna be some volatility around that. I think that, you know, the policy uncertainty persists for a little bit here, which could create some volatility. But, you know, ultimately, we're gonna move through this period of uncertainty, and, you know, we're gonna be in an environment where stocks continue to remain very cheap to bond. So I think when we get to the other side of this volatility in this correction, investors will start coming back into this market.

ALEXIS CHRISTOFOROUS: Brian, what do you do with all that volatility? How do you play that right now where you just stay on the sidelines? We saw all the activity and puts and calls as traders sort of try to get a leg up on the volatility. What are you doing for your clients?

BRIAN LEVITT: Yeah. I mean, I think that investors should use that type of volatility rather than necessarily try and play day to day, obviously depending on the horizon. I think that if you believe that we're in a longer-term bull market, which I believe, and you believe that this recovery will ultimately gain more traction-- I mean, there may be fits and starts as we're seeing on days like today-- you should use these types of volatility, these types of drawdowns to build positions in markets.

I know that a lot of investors were worried that they had, you know, missed the March 23 bottom, didn't know how to get back into these markets. And, you know, the market gives you an opportunity here. Unfortunately, most investors tend to bail when they see these type-- this type of volatility. But I would view it as buying opportunities.

BRIAN SOZZI: Brian, is the health care sector now off the table? With concerns around the Affordable Care Act, why get involved in this space?

BRIAN LEVITT: Yeah. I don't know if the health care sector is necessarily off the table. Obviously, we have some policy uncertainty there. But, you know, I think what investors should be looking at is, you know, more of the biotech sector and what we think are going to be the long-term structural winners within that part of the market.

So, you know, I don't know that, you know, necessarily these big growth themes that investors have been excited about disappear simply because of an election season. I would suggest that investors should continue to lean into the longer-term secular grow trends. And I think this shift to, you know, the more biotech companies, you know-- I think that's a long-term theme they'll continue to play out.

ALEXIS CHRISTOFOROUS: Do you think when this market starts to rebuild, Brian, it's gonna be the big name tech stocks that lead us higher this time? Or are we gonna see new leadership in the market?

BRIAN LEVITT: I suspect you'll have some new leadership. But, Alexis, it depends on the time horizon. So, you know, if-- if what we're envisioning is right and you get an economic recovery-- obviously, again, with fits and starts as COVID cases rise in parts of the world-- but as you get a recovery, you would-- and interest rates rise, maybe inflation picks up a little bit, you would expect the more economically sensitive parts of the market to perform well. They had not been the big winners.

And-- but over time, that recovery is gonna give way to a slow expansion. And that slow expansion takes us, in my opinion, right back to the types of names that had been the outperformers. So, you know, what I always say to investors, if you think growth is gonna accelerate by value, we're at pretty depressed levels. It should accelerate from here.

But if you think growth's gonna be stable, buy growth. So I think it's a bit of a time horizon. I think we accelerate from here over the next couple of years, but give way to a slow expansion. And investors are gonna want to be participating in those big, long-term secular growth companies.

BRIAN SOZZI: Brian, what's the catalyst to buy the dip here in the market? I don't-- I don't see a lot of catalysts going in to your end. If anything, I see negative catalysts.

BRIAN LEVITT: Yeah. I mean, look, the market gets ahead of those-- the market gets ahead of that. And so, you know, we knew we were coming into a period of some policy uncertainty. And we're here.

And we knew we were coming into a period where there would be concerns about reopening and concerns of cases picking up. So we're here. The market gets out in front of that.

You know, obviously, we're 40-something days from an election. So those concerns hopefully start to, you know, dissipate, you know, that we'll hopefully start to have some greater clarity around what that's going to look like. You know, and as we potentially get greater clarity, maybe we have a better understanding of what a fiscal deal can look-- can look like.

And, you know, remember, we've all been so worried about this second wave of cases. You know, it looks like it may be-- it may be starting to happen. But we also know that-- we know the behaviors that we need to exhibit in order to compress cases.

And so, you know, a catalyst could be perhaps that we move quicker than we did in February or March. We have a better understanding of what it takes to compress cases. And we, you know, hopefully start to-- start to see those lines coming down again.

ALEXIS CHRISTOFOROUS: All right. Brian Levitt, global market strategist at Invesco, thanks for joining us this morning.

BRIAN LEVITT: Thank you.