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Investors looking for stock market bargains may want to wait: JPMorgan

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U.S. stocks are not all that cheap at these levels, Samantha Azzarello, global market strategist at JPMorgan Funds, told CNBC on Tuesday.

"If the market retrenches 5 to 10 percent, we would think of that as the market being on sale, because longer run we still like equities," Azzarello said on "Squawk on the Street." She added it looks like the earnings recession bottomed in the first quarter.

"[But] the need to be selective is more relevant than ever," Azzarello said, warning market leadership appears to be ready to shift from defensive stocks to cyclicals, as the Federal Reserve prepares to hike interest rates. She believes the Fed will increase rates before the end of the year for the second time in the past decade.

Another reason for short-term caution, according to Azzarello, is "volatility." She also sees "sub-trend growth" as a "big scare" for investors to watch for down the road.

"Central banks, for everything they try, can't change weak aggregate demand and subdued business confidence [and] low commodity prices. Not even fiscal stimulus can fix that. That's more of a wait and see, and that's a little bit scarier," she explained.

Fiscal stimulus looks like it's on the way, Azzarello said. "Both candidates look like they're making the case."

"But at the same time, if you look at debt levels, there is not room to do a lot of fiscal stimulus," she said. "I don't think it would be enough to make the market happy compared to what central banks were able to do."