The volatility of the stock market may be in its early stages.
Despite the bullish outlook in 2022, Meghan Shue of the Wilmington Trust expects sharp volatility to pick up as investors digest the Federal Reserve less accommodative and assess the new risks involved to the Covid omicron variant.
“While we’re holding on to a higher amount of cash, we think there might be more opportunities emerging,” the company’s head of investment strategy told CNBC.Trading country“on Friday.” Cash could be your friend in the coming months. “
Major indexes are falling. The Dow dropped 532 points on Friday and was the worst day of the month. It fell 1.9% last week while S&P 500 lose 1%.
Meanwhile, heavy technology Nasdaq fell 3% and is now down more than 6% from a 52-week high. Nasdaq has traditionally had a tougher time with the weather growth rate and growth environment slow down.
“When you combine that with a high valuation and then continue to have uncertainty around the omicron, you just get a formula for constant volatility and a correction is possible,” said Shue, a CNBC contributor.
Her base case calls for a stock correction of at most 10% over the next two to three months. But she refers to it as a buying opportunity.
“According to the cycle and value still looks very attractive,” she said.Small hat also very beaten up. And, if we go beyond the omicron, we could see a rally there. “
Overall, Shue, who oversees $152 billion in assets, is positive about the US and international markets. According to her company’s 2022 growth forecast, inflation will normalize, supply chain pressures will ease and labor market participation will increase.
“We are going back to the accelerated phase of the economic cycle,” she said.
Last month, Shue told “Trading Nation” her company has Its largest ever inventory.
“Share [are] is still expected to be one of the strongest performing asset classes,” said Shue.
