A lot of good news was priced into markets coming into earnings, says Citi's Drew Pettit

Market Overview - The recent market sell-off has raised questions about the stability of the markets, particularly with the potential for the Federal Reserve not to cut rates as previously anticipated [1][4] - The NASDAQ and S&P have seen declines over the past three weeks, while the Dow has fallen for three days [1] Investor Sentiment - There is a belief that the current market pullback is a healthy pause rather than a sign of deeper issues, as good news has already been priced in ahead of the earnings season [2][3] - Investors are recalibrating their expectations regarding potential Fed rate cuts, with a consensus that the Fed may remain on hold [4][6] Economic Indicators - Core inflation has remained stable in the range of 2.75% to 3.25%, with historical data suggesting that the Fed has rarely cut rates in similar conditions [6] - The market's confidence in imminent rate cuts has been surprising, given the current economic indicators [5][6] Investment Strategies - A focus on risk management is emphasized, particularly in light of high market valuations and the need to assess how much good news is already priced in [10][12] - A suggested investment strategy involves using an ETF that provides exposure to the NASDAQ 100 while capping losses around 10%, allowing for participation in tech stock growth [12] Sector Rotation - There is a recommendation for investors to rotate funds from defensive stocks that have outperformed into growth sectors like tech and financials during market pullbacks [14][15] - The current market conditions may present opportunities to buy growth stocks at lower prices, suggesting a strategic approach to portfolio management [14]