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Why markets may turn to the downside amid Q1 earnings

As the first quarter earnings season continues, this week will see the financial performance of companies that will shed light on consumer health. With consumers exhibiting a slowdown in spending, Wells Fargo Investment Institute Senior Global Market Strategist Sameer Samana joins the Morning Brief to discuss what these earnings reports could mean for the markets. Samana suggests that stocks are currently "a little bit above fair value" since they are trading at higher levels, adding that there is an "asymmetric risk to the downside." He identifies Middle East tensions, Federal Reserve uncertainty over interest rates, and economic data as potential risks that could impact market performance moving forward. Samana notes that markets have recently moved "in one direction," with investors seemingly "forgetting what volatility looks like." He cautions that various potential market headwinds could prompt many investors to exit their positions, "leading to episodic volatility." As a result, he believes that the current market conditions could be "as good as it gets." However, Samana advises investors to consider investing in the energy, materials, industrials, and healthcare sectors. For more expert insight and the latest market action, click here to watch this full episode of Morning Brief. This post was written by Angel Smith