Major indexes starting off 2024 start with the worst open to a year since 2016. Is this just a rough start, or is this a sign of the year ahead? Charles Schwab Chief Investment Strategist Liz Ann Sonders joins Yahoo Finance Live to weigh in on the outlook for 2024.

Sonders notes that though it is still early, she thinks "yields, for the most part, will remain in the driver's seat for stocks this year."

In terms of the margins, Sonders believes that many of the Magnificent Seven stocks were “a bit stretched, overbought in technical terms.” Sonders also says that 2024 will be "a year that active management is on a more level playing field with passive." Find out why in the video above.

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

Editor's note: This article was written by Eyek Ntekim

Video Transcript

RACHELLE AKUFFO: Well, looking at stocks retreating once again this morning after bouncing back briefly on Monday. Major indices starting off 2024 with the worst open to a year since 2016. But will it be sunny skies from here or will markets be rockier than expected in 2024?

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Joining me now is Liz Ann Sonders, Charles Schwab Chief Investment Strategist. So, Liz, is there good news to be found at this point? Is it too early to say just how much volatility will continue to see from here?

LIZ ANN SONDERS: I think it is obviously too early to tell. We're only at the very beginning of January here. But last year, of course, had a characteristic of extremely low volatility, at least on the equity side of the equation. Whereas, on the bond market side, that's where you saw the most rampant volatility.

And I still think that there's connectivity here with the bond market, particularly, yields and stocks. We've moved back into this inverse correlation between yields and stocks. And I think at least through the point where the Fed doesn't just talk about pivoting but they actually pivot to a cutting cycle, I think yields for the most part will remain in the driver's seat for stocks this year.

RACHELLE AKUFFO: And, Liz Ann, we did see people with some profit taking, especially, after the rally led by the Mag Seven here. What does the outlook look like now? Because it's a bit of a mixed picture here. And we're going to expect a lot out of these earnings calls to get a bit more detail as to where these profits are going to come from and what the margins are looking like.

LIZ ANN SONDERS: Yeah, I mean, there was no doubt that many of those names-- the Magnificent Seven were a bit stretched overbought in technical terms. The concentration problem was fairly acute. And, I think that's why you saw profit taking concentrated in those areas come in at the start of the year.