Markets mixed as analysts see correction despite better earnings

Markets were mixed on Tuesday.

The S&P 500 fell 0.2 percent and the Nikkei 225 fell 0.3 percent but the STOXX Europe 600 rose 0.2 percent.

US stocks fell after President Donald Trump warned North Korea about facing “fire and fury” if the latter continued to threaten the US.

“The geopolitical tensions could be the catalyst for the market's direction in the next coming weeks depending on how it all shakes out,” said Robert Pavlik, chief investment strategist at Boston Private.

However, other analysts noted the underlying strength of the market.

“Earnings have been getting better and better,” trader Peter Costa said.

“You've got this underlying strength that is so broad-based and we haven't seen that and that's what's keeping this market aloft in this very steady upward trending motion,” said John Blank, chief equity strategist at Zacks Investment Research.

However, Chris Johnson, CEO of Johnson Research, said that “the market is still a little bubbly” and suggested waiting for “a bit more of a correction” before getting in.

That correction, though, might turn out to be somewhat more than many investors are thinking, according to Bank of America Merrill Lynch chief investment strategist Michael Hartnett.

“I think there will be a moment and quite a significant moment, probably in October or November, but it could be September, when the markets are going to correct and correct quite meaningfully,” he said.