Markets rebound from an off day on Wednesday with S&P500 (^GSPC) and NASDAQ (^IXIC) rising 1%.

Threadneedle Ventures Founder and CEO Ann Berry joins Yahoo Finance Live to discuss the market and what to expect in the early months of 2024.

“I take issue...with this idea that the Fed has truly pivoted,” Berry says, arguing that she didn't think Federal Reserve Chair Jerome Powell’s implied as many rate cuts as the market is pricing in.

With the market recently pricing in six rate cuts, Berry believes the market will be “disappointed.” However, Berry thinks that cash will move off the sidelines to take advantage of corrective dips, creating a “wacky dance” in the markets.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JOSH LIPTON: Moving on, the market's closing just moments ago. The theme we're seeing here today, here comes Santa Claus. Stocks rebounding,

Dow closing up more than 300 points. That comes off the index's worst day since October. The S&P 500 and NASDAQ both closing up more than 1%.

The recovery coming following a losing day on Wall Street, Wednesday. Here with more reaction is Ann Berry, Threadneedle Ventures founder and CEO. Ann, it is great to see you in studio.

ANN BERRY: Thanks for having me in. Great new space, love it.

JULIE HYMAN: Thank you.

JOSH LIPTON: So let's start out with the stock market. You know, we've seen this steady rally, this melt up. The Fed pivots, investors pile in. What are your thoughts about where we are and where we're headed?

ANN BERRY: Well, it means the reindeer are still flying. The Santa Claus rally, we're all still believers. So look, if you go and look in history, what's happened today isn't that surprising just given the sell off yesterday and seeing the recovery.

I take issue if, I'm really honest, with this idea that the Fed has truly pivoted. I don't really think that the Fed has pivoted in the way the market believed up until, sort of, yesterday, which, sort of, prompted some of the sell off. I did not hear Federal Chair Jay Powell saying the rate cut is imminent and I certainly didn't hear we're getting three or four rate cuts next year. I think we're still stuck in higher for longer territory. I just think we don't want to hear it.

JULIE HYMAN: I mean, as always, right, we keep saying this, there's what he says and there's what the market hears. And he said we are not declaring victory. He was pretty firm on that point.

So when we talk about six rate cuts being priced in for next year, how is that going to play out as the market-- if it doesn't happen and if market participants start to realize that that's not going to happen?

ANN BERRY: You know, I think about this today, Julie, and I think there are two related points that are going to kick in here. So first of all, will there be six rate cuts? I think the market is going to be disappointed because we've had a slew of senior Fed officials coming out since the press release effectively saying, market, you've got to rethink your assumptions here.

Where I think that there is going to be continued buoyancy in the market is as soon as we get a little bit of a corrective dip, like the one we saw yesterday, I think some of that $5 and trillion in change of cash that's sitting around right now in money market funds, where investors know that over the long run you've got to be invested in the stock market, I think they keep trying to find entry points. And I think every time there's a little bit of a dip reflective of the reality of the Fed outlook, some of that cash is going to come back in and pick up some of that slack. So I think there's going to be this sort of wacky dance for a little while longer.