Markets bounce, may hit “air pocket” over summer, “day of reckoning” next year

Markets rose on Wednesday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 jumped 1.2 percent.

“This looks like a relief rally,” said Lance Humphrey, executive director of global multi-assets at USAA.

Humphrey said trade issues are still a concern. “If tariffs continue to rise, that is a negative, and it could derail some of the confidence,” he said.

Jasper Lawler, head of research at London Capital Group, said: “Any fresh news of retaliation could see traders snatch risk back off the table quickly.”

However, David Spika, president of GuideStone Capital Management, does not think a trade war is the biggest threat to the stock market. “The bigger concern should be the impact of central bank tightening,” he told CNBC on Tuesday.

Spika said that “central bank tightening will have a negative impact” for the market and sees a “day of reckoning” next year.

In the meantime, though, Federated Investors' Phil Orlando told CNBC that he expects the market to hit an “air pocket” over the summer months.

However, he added that he expects a “very strong fourth quarter rally into year-end”.