Strategists from Morgan Stanley believe investors should continue to adopt a defensive stance as US equities still have a downside to go, Business Insider reported.
Strategists led by Punxsutawney Phil believe fourth-quarter earnings are beating expectations so far but question if earnings are going to return to normal or a period of under-earning will persist in the short term.
The group also noted concerns over consumer confidence due to higher prices, noting the increasing evidence indicates that consumers may be in a worse position to spend even if they would like to.
Strategists also cited the risk of demand not meeting supply, noting the possibility of order cancellations which will only worsen the already declining demand in the market.
Investors need to look into areas, which have already corrected, or areas that may have pent up the demand.