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Art Cashin: Beware of Increased Volatility

Stocks ticked lower on Monday as investors took a cautious approach to trading ahead of the government's latest report on the labor market. Art Cashin, director of floor operations at UBS Financial Services, and Bernard McSherry, senior vice president of strategic initiatives at Cuttone & Co., discussed their market outlooks.

“Everyone’s trying to sneak in the last few days of vacation before the kids go back to school — and that causes the threat of volatility,” Cashin told CNBC.

“Empty desks mean less liquid markets and if some of that data breaks big, things could move drastically on light volume.”

Last Friday, Fed Chairman Ben Bernanke convinced investors that the central bank would do all it can to help to stabilize the recovery. His speech helped the markets cap a rocky week with a strong rally.

“What [Bernanke] said is: ‘I don’t see a double dip, and deflation is not a major threat’ and that’s what moved everything around,” said Cashin. “But we’ve got to get the S&P up through 1,066 or we’re going to stay in trouble.”

McSherry's View:

In the meantime, McSherry said investors have to "remain nimble" as several major reports are expected throughout the week, including the government’s non-farm payroll numbers on Friday.

“We’re hoping that the consumer can pick up where the manufacturing is tailing off,” said McSherry. “We’ve got a little bit of a better number this week—maybe if the employment picture brightens a little bit towards the end of the week, we can get a little pop.”

With the latest uptick in M&A activity, McSherry suggested looking into the tech space.

“You want to find some of those undiscovered gems out there on the smaller side and take positions there in hopes that someone comes along later,” he advised.

Scorecard—What They Said:

  • Cashin's Previous Appearance on CNBC (Aug. 27, 2010)
  • McSherry's Previous Appearance on CNBC (Aug. 26, 2010)

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Disclosures:

No immediate information was available for Cashin or McSherry.

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