NEW YORK (TheStreet) -- Volatility continues to increase as U.S. equity prices swoon in this seasonally weak time of year for stocks. But that shouldn't keep investors from staying long in quality U.S. stocks, according to David Lafferty, chief market strategist for Natixis Global Asset Management.
He explained to TheStreet's Gregg Greenberg that these 4% pullbacks are relatively common in bull markets. Over the past several years, the S&P 500 has encountered over 20 such moves.
The CBOE Volatility Index (VIX.X is hitting levels last seen in March, although it has failed to close above $18 since February's rapid selloff in the broader market.
"We've had this pre-announcement vacuum," Lafferty said, as companies try to break the negative news ahead of their scheduled earnings releases.
It's estimated that companies will grow earnings by 5% for the third quarter, but Lafferty said his expectations are slightly higher than that.
Alcoa (AA - Get Report) , whose earnings release is considered the unofficial start to earnings season, reports its results after the market close on Wednesday. Costco Wholesale (COST - Get Report) beat revenue and earnings expectations when it reported on Wednesday morning.
When asked about commodity pricing (see the chart above), Laffterty said that "in the long run, [the lower price] is a good thing" because that puts more money in consumers' pockets.
However, over the near term, lower commodity prices and a stronger U.S. dollar may weigh on the performance of several companies, especially during earnings season.
Finally, on bonds, he explained that investors have interest rate risk because rates are expected to increase in the not-to-distant future. "We don't hate bonds, but we're a little leery," he concluded.
-- Written by Bret Kenwell in Petoskey, Mich.