Stocks sank Wednesday in the worst start to the fourth quarter for the three major indexes in three years. While buyers appeared to be staying away, two market pros told CNBC the pullback has created opportunities.
"Selectivity is extremely important in the equity markets now. Paying attention to valuations is extremely important now," Dave Donabedian, chief investment officer of Atlantic Trust, said in an interview with "Power Lunch."
Jim McCaughan, CEO of Principal Global Investors, agreed.
"The U.S. has got the most secure growth story in the world. So, within the U.S. market, buy on setbacks, focus on domestic earnings," McCaughan told "Street Signs."
He likes small- and mid-cap names on domestic earnings, manufacturing and consumer stocks. He'd stay away from big financials and materials.
While there may be opportunities, buyers were not stepping in Wednesday, Princeton Securities Group trader Ben Willis told "Power Lunch."
"This is a gut check for the market on the 'buy the dip' mentality and right now it's not there," he said.
The Dow Jones industrial average and wiped out all their third-quarter gains with their declines Wednesday.
Buyers were "testing the will of the sellers, bidding lower to see at what point the sellers are going to either exhaust themselves or start to really get nervous as we break these technical levels and start to toss it out," said Kenny Polcari, O'Neil Securities director and CNBC market analyst.
He told "Power Lunch" he thinks there's a real chance over the next couple of days that the S&P 500 could test the August lows at the "1,915ish levels."
Doug Sandler, co-founder and chief equity strategist at Riverfront Investment Group, thinks the market is only about 3 to 4 percent into a pullback.
Over the summer, his firm took a "significant" amount of money out of the U.S. and put it into international markets because it thought the U.S. needed good news to justify valuations and overseas markets were already priced for bad news. While he still thinks that's the right trade, Sandler said U.S. stocks have become more attractive than they were a few days ago.
"It's kind of an exciting time. I think it's really important to keep the big picture in your mind. The big picture is you've got to be in productive assets," Sandler said in an interview with "Power Lunch."
"The penalty for owning safety stuff is huge. Inflation is running at 2 percent and you're getting about a 2.40 on bonds. You're not going to get paid on that long term."