Stocks were mixed on Monday.
The S&P 500 fell 0.3 percent but the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.9 percent.
Despite the weak start to the fourth quarter for US stocks, Paul Eitelman, investment strategist for North America at Russell, said that in the event of a “significant selloff in the United States, we would want to buy that dip because we think the economic fundamentals are OK”, Bloomberg reported.
However, Eitelman also said that a muted outlook for earnings and rate hikes by the Federal Reserve could derail the market. “In our view the risks are asymmetrically skewed toward a more negative outcome,” he said.
Indeed, USA Today reported that Wall Street analysts now see third-quarter earnings shrinking 0.5 percent.
“For stocks to trend to meaningfully higher levels you need to see earnings move appreciably higher,” says Terry Sandven, chief equity strategist at US Bank Wealth Management.
“The market is vulnerable to a surprise rise in rates or a major earnings disappointment,” says Nick Sargen, chief economist at Fort Washington Investment Advisors.