As equity markets enter a period of increased volatility amid growing uncertainty over the timing of the Federal Reserve's first rate hike, the message from strategists to retail investors is to keep calm and carry on.
"Our message is that these short-term spikes in volatility could lead to a couple of down days, but just because volatility is trending higher that doesn't mean equity market will go down. It just means that the unusually straight line up doesn't continue," Manpreet Gill, senior investment strategist at Standard Chartered told CNBC.
The CBOE Volatility Index, which shows the market's expectation of 30-day volatility, spiked 27 percent to 16.95 on Thursday – its highest level since April 11, but below the historical average of 20.
The move came as the Dow Jones Industrial Average sank 1.9 percent, erasing its gains for the year, and the S&P 500 dropped 2 percent. The Wall Street gloom extended into the Asian trading session on Friday, but losses remained contained. The Nikkei slipped 0.2 percent, while the Hang Seng Index traded down 0.5 percent.
"We wouldn't advocate trying to time the swings, especially for retail investors. We believe any pullback is likely to be limited and short-lived in nature as long term indicators like valuations, earnings and key macro indicators are still very supportive," Gill said, adding that he expects downside in U.S. stocks to be capped at 5 percent.
The U.S. economy expanded at an impressive 4 percent annual rate in the second quarter as activity picked up broadly after shrinking at a revised 2.1 percent pace in the first three months of the year.
On top of this, there are more signs of an improving labor market: U.S. labor costs recorded their largest increase in more than 5-1/2 years in the second quarter, a sign that a long-awaited acceleration in wage growth was imminent.
With the economy getting stronger, this has fueled concerns that the Fed may hike rates sooner rather than later.