US stock market trend “likely to remain up”

The S&P 500 fell 4.1 percent last week, its worst weekly performances since March.

Despite the sharp sell-off, some analysts remain sanguine.

“Investors shouldn't panic,” said Christopher Smart, head of macroeconomic and geopolitical research at Barings. He said that the latest sell-off “has the feel of a temporary correction”.

Analysts at Amundi said that the “bear checklist is not yet flashing red”.

Shane Olivier, head of investment strategy at AMP Capital, said: “A US recession still looks a long way off and this in turn suggests that the trend in earnings and hence share markets is likely to remain up beyond the near term pull back.”

Ned Davis Research's chief US strategist Ed Clissold said that strong quarterly earnings and guidance should help support the market.

“We still think we can get a year-end rally once we get through this weakness here,” he said.

Other analysts agree that earnings will be key.

“There's a credible possibility the biggest cause of the near-term jitters is fear of where guidance goes in the fourth quarter,” said Art Hogan, chief market strategist at B. Riley FBR.

David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management's Chief Investment Office, said there could be a hit to earnings from the trade tariffs which could be causing a “higher-than-normal degree of uncertainty”.

However, he added: “If we do see a little bit of a normal decay in the earnings growth estimates, the market should be able to digest that.”