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One Sector To Avoid As Fed Prepares To Raise Rates

Federal Reserve building, Washington.
Getty Images
Federal Reserve building, Washington.

U.S. stocks turn lower on Tuesday as volatility creeps back into the market.

As investors anticipate the fed's next move which investments make the most sense?

Two strategists agree that avoiding utilities is a smart move.

"Stay cautious on U.S. utilities" says Russ Koesterich, BlackRock's Global Chief Investment Strategist. "They are rate sensitive and expensive."

James Liu of J.P. Morgan Funds agrees. He advises his clients to favor consumer discretionary stocks instead. Saying the sector "should benefit from the consumer strength."

Liu also says to "diversify your equity exposure with European stocks." He feels the "cyclical bounce in the region should continue which will be supportive of risk assets."

When investing overseas, Koesterich says investors should consider Chinese H-Shares. "They are still relatively cheap and will benefit from further stimulus by the Chinese government."