Markets Set Up For a 'Nice Pullback': Chief Investor

The Dow dropped more than 1 percent Thursday on worries about China and Pres. Obama's plan to crack down on big financial firms. What should investors expect from the markets going forward? Mary Jane Matts, director of large cap value strategies at Fifth Third Asset Management, and Michael Jones, chief investment officer of Riverfront Investment Group, shared their insights.

“We think that if we have a correction, it’s completely understandable,” Jones told CNBC.

“If you look back at 1998, 2002 and 2004, the market ran into a brick wall at about 1,140 on the S&P, and so with that kind of history and with investor sentiment finally getting optimistic after 9 months of rallying, we’re set up for a nice pullback.”

In the meantime, Matts said she thinks the market is fairly valued.

“But if you go one layer beneath the topline, it looks like there’s still a lot of complacency seeping back in about risk, which is not a good sign for the market overall—and, in particular, for the lower-quality stocks,” she said.

“So I can understand some nervousness as well, but the market overall looks fairly valued, so it can bounce around quite a bit in the trading range.”


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No immediate information was available for Jones or Matts.