Markets (^DJI, ^IXIC, ^GSPC) anticipate the Federal Reserve to cut interest rates at its September FOMC meeting in two weeks, but several uncertainties could affect this outlook. The August jobs report due out Friday, the looming US election, and September's historical reputation as a challenging month for stocks could all spark volatility (^VIX).

Crossmark Global Investments chief market strategist Victoria Fernandez joins the Morning Brief team to discuss these factors.

Fernandez expects "continued volatility" for markets in September, noting "there's a lot of different elements at play" that could contribute to a market downturn.

However, she advises investors to focus on areas that "typically do well in uncertain times." According to Fernandez, this includes consumer staples (XLP), healthcare (XLV), and trimming tech (XLK) positions to have cash available. She also cautions against small caps (^RUT): "The markets do not like uncertainty... small caps really don't like uncertainty."

Regarding a potential 50-basis-point-cut by the Fed, Fernandez says, "It's a high hurdle," adding that upcoming inflation data would need to be "pretty negative" to significantly influence a 50-point cut. However, she believes, "I still don't think that's gonna be their base case." Fernandez elaborates, "I think they're gonna stick to 25 [points] because all along, what has the Fed been saying? They don't wanna move too quickly because they don't want to stoke the fires of inflation that could still be there."

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