US stocks (^DJI,^GSPC, ^IXIC) are eyeing a recovery this week after last week's sell-off. Commonwealth Financial Network CIO Brad McMillan joins Morning Brief to discuss the state of the market as the Federal Reserve gears up for an interest rate cut at its September meeting.

McMillan expects more market volatility ahead, yet, it will be "constrained" for two reasons: a slowing economy and an interest rate cut. While the economy is slowing, McMillan does not see a looming recession, and as the Federal Reserve starts easing interest rates, the market will have to adjust.

He explains that the market "is still looking to adjust to a more defensive posture," as US economic growth continues to slow. He encourages investors to take defensive positions that still offer opportunities for growth. He specifically points to the real estate sector (XLRE), adding that it is an area of the market well-positioned for an interest rate cut.

As the market rotates away from Big Tech, McMillan believes there is some downside risk: "A lot of what has been what's been driving this is the idea that the AI tree is going to grow to the sky, and we're starting to get some realization. You're starting to see some numbers out there that say, no, that's not going to happen."

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl