Investors are advised to remain calm and focused on long-term strategies as the market experienced a period of sharp volatility this week, according to Alan McKnight, Chief Investment Officer for Birmingham-based Regions Bank. McKnight, whose group manages nearly $60 billion in assets, shared his insights in an interview with CNBC.

Despite underperformance in earnings expectations, McKnight said he sees potential for buying into market strength as earnings season progresses. “I think that right now the market is still trying to deal with the reality that earnings aren’t quite as good as people expected,” said McKnight. “But the reality is when you look at 75% of the S&P having reported, we’re still looking at approximately 11.5% earnings growth this quarter, which is pretty strong.”

"I think right now, the key is to try to stay calm, carry on, and really watch to see how we look through the course of this year from an economic perspective."

As a sell-off grips the major indices, @RegionsBank Asset Management CIO Alan McKnight shares his strategy with us: pic.twitter.com/kQXssu8rg3

— Money Movers (@moneymoverscnbc) August 2, 2024

He noted small-cap stocks are being sharply affected. Small-cap stocks are from companies with market caps of $300 million to $2 billion.

“I think that’s what you’re seeing with the sell-off in the Russell 2000 today as people are pulling back from the trade that is worked through the last couple of weeks with a slowing economy, with a bit of a concern around rates, small-cap stocks are definitely getting penalized.”

McKnight added now is not the time for investors to be rethinking or reallocating.

“What we would say is continue to reinvest in those names that are delivering growth. What we saw with Meta, what we’ve seen thus far with some of the consumer staples names and even some of the other healthcare names. So earnings are still good, they’re just not great.”

“Right now the key is to try to stay calm, carry on, and really watch to see how we look through the course of this year from an economic perspective.”

The markets have had a turbulent start to August, with the S&P 500 falling sharply due to concerns over the upcoming election, slower-than-expected economic data, and global reactions to poor job reports in the US, particularly impacting technology-related stocks and causing significant volatility.

McKnight said he remains optimistic about the broader economic outlook. He does not believe a recession is imminent, citing a cooling job market but no collapse in economic activity or consumer spending.

Austen Shipley is a staff writer for Yellowhammer News. You can follow him on X @ShipleyAusten