It might be tempting to buy the dip. After all, the S & P500 has declined more than 15% since its August peak and is around 25% off its January high. But one investor cautions that now might not be the time. "It's a bit early to go back into the market, according to our modeling and evaluation," says John Ricciardi, head of asset allocation at Deuterium Capital. Ricciardi said he would want to see three metrics turn favorable to find "good risk-asset returns". These are: earnings growth, falling borrowing costs, and global liquidity — and he says all three are currently missing in equity markets. Excluding the energy sector, earnings estimates for the third quarter are already down 2.6% compared to the previous three months, according to Refinitiv. With high inflation and rising interest rates, Ricciardi says stock market valuations will need to fall further before buyers return. "We've had about 25% off this year in global markets, and that's the beginning of a bear market. But quite often, we've seen more than that before you get to a bear market bottom." Riccardi said investors should be selling stocks in the technology, discretionary, and communication sectors because they all rely on increased consumer spending – which the Federal Reserve is trying to lower by hiking interest rates. He also said industrial output would likely see an "unexpected drop," along with a collapse in retail sales by 8% over the next three months, both of which could drag equities lower in the near term. What should investors buy? Ricciardi said investors should reposition toward stocks sensitive to interest rates – the so-called defensive stocks – and identified companies in the consumer staples sector. Procter & Gamble , Coca Cola and Pepsi Co were among the stocks he thinks might fair well while interest rates continue to increase. Procter & Gamble has, on average, a buy rating from analysts with a price target 24% higher than the current share price, according to FactSet Estimates. However, Goldman Sachs analyst Jason English downgraded P & G to neutral on Monday on concerns over the company's exposure to non-U.S. dollar earnings at a time of dollar strength. Ricciardi, who is also a fund manager at Deuterium, suggested Dominion Energy , NextEra and Duke Energy in the utility sector and Air Products and Sherwin-Williams in the "small corner" of the materials sector. FactSet data shows that Dominion Energy and NextEra are buy-rated by analysts, on average, with 37% and 29% upside, respectively, to their share price from current levels. Duke Energy had a hold rating, on average. Andrew Bischof from Morningstar's equity research team was the sole analyst with a sell rating on both NextEra and Duke Energy.