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Bob Nardelli: I’d be careful on equities right now

The Dow (^DJI) is up 60% in the last five years, but the momentum has slowed in the last year. At the time of publication, the Dow is 70 points below where it was one year ago. Stocks have recovered from the steep losses and volatility at the end of the summer, but they’re struggling to break out of the current range.

The reason? Uncertainty, according to veteran CEO Bob Nardelli, who says it’s really hard to understand what the underpinning is for the Dow at 18,000.

“We’ve got this fluctuation day-to-day, so there’s no predictability and no consistency in what’s happening out there, so I’d be careful on getting overweight in equities right now,” he said.

Where to put money safely?

So where should investors look for reliable investment options while the markets await clear direction from the Federal Reserve?

The Former CEO of Home Depot (HD) and Chrysler (FCAU) thinks the 10-Year Treasury (^TNX), which is yielding more than 2%, could be an option for investors who want to be cautious and are willing to pass up some more opportunistic upside.

Sectors worth a look and worth avoiding

Caution is also in order when it comes to picking sectors, according to Nardelli. He points to trouble among the large industrials, such as Caterpillar (CAT) and John Deere (DE), but sees opportunities elsewhere.

“I certainly would look at health care. I’d look at technology. Certainly the auto industry has served us well,” he said. “I think you have to be very careful and more of a rifle shot on where you’re going to put your money.”

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