Markets mixed amid concerns over trade tension and Brexit

Markets were mixed on Thursday.

The S&P 500 jumped 1.1 percent to end a five-day losing streak but the STOXX Europe 600 tumbled 1.1 percent. Earlier in Asia, the Nikkei 225 fell 0.2 percent but the Shanghai Composite jumped 1.4 percent.

Despite the rebound in US stocks, some analysts see continued headwinds for the market.

Lindsay Bell, investment strategist at CFRA, said that concerns over US-China trade tensions “will continue to intensify as we grow closer to January, when tariffs will jump from 10% to 25%”.

Mark Esposito, president of Esposito Securities, said that the UK's exit from the European Union is having second-order effects on the US economy. “Brexit doesn’t help the European economy, and it’s helping to drive up the dollar, which weighs on earnings and means fewer people will come here to buy our goods,” he said.

Stocks fall but oil rises as “macro demand concerns likely overdone”

Markets fell on Wednesday.

The S&P 500 fell 0.8 percent and the STOXX Europe 600 plunged 2.2 percent. Earlier in Asia, the Nikkei 225 rose 0.2 percent but the Shanghai Composite fell 0.9 percent.

Oil prices stabilised though, with West Texas Intermediate crude rising 1 percent to end a 12-session losing streak.

Jeffrey Currie and the commodities team at Goldman Sachs wrote in a note that “the macro demand concerns from October were likely overdone”.

Nevertheless, Jameel Ahmad, global head of currency strategy & market research at FXTM, said that “traders are waking up to the significant threat that slowing global growth in 2019 will weaken demand for commodities like oil”.

While oil's gain provided some relief for stocks on Wednesday, the stock market is still experiencing “a continuation of the selling pressure that began in early October”, according to Robert Pavlik, chief investment strategist at SlateStone Wealth.

“We're still working through this corrective phase a little bit and I think that could take some time,” said Jeffrey Mills, co-chief investment strategist at PNC Financial Services Group.

Oil plunges, Goldman bear market indicator flashes red

Markets were mixed on Tuesday.

The S&P 500 fell 0.2 percent while the STOXX Europe 600 rose 0.7 percent. Earlier in Asia, the Nikkei 225 plunged 2.1 percent but the Shanghai Composite rose 0.9 percent.

Oil fell, with West Texas Intermediate crude plunging 7.1 percent.

“The topside optimism the markets experienced after getting through the US midterms relatively unscathed has quickly reverted back to concern over trade issues between the US and China and the affect that tariffs and protectionist policies have had on overall global growth,” said Rakuten Securities Australia in a note.

“The real struggle for equity prices now are the highly visible potential for policy errors,” said Eric Wiegand, senior portfolio manager at US Bank.

Bob Doll, Nuveen Asset Management's chief equity strategist and senior portfolio manager, noted that stocks have yet to successfully retest the October lows.

“I don't think we're going to see a new high this year,” he said. “We're going to bounce around with a lot of side-wise volatility.”

Meanwhile, Goldman Sach's bear market indicator is "flashing red". Goldman chief global equity strategist Peter Oppenheimer said that the indicator is at a level where historically, “a correction followed by a rally is more likely to be followed by a bear market than when these indicators are low”.

“We remain bearish, as investor positioning does not yet signal 'The Big Low' in asset markets,” said Michael Hartnett, BofAML's chief investment strategist, in a statement.

However, the November BofAML fund manager survey indicated some optimism, with cash balances falling from 5.1 percent of portfolios to 4.7 percent.

Markets fall, oil in record losing streak

Markets mostly fell on Monday.

The S&P 500 plunged 2.0 percent while the STOXX Europe 600 fell 1.0 percent. Asian markets had risen earlier in the day.

Oil fell on Monday even after Saudi Arabia said over the weekend that it would cut its oil production. West Texas Intermediate crude fell for the 11th consecutive session, its longest losing run on record.

Michael Schoonover, portfolio manager at Catalyst Funds, said that “we are seeing the inevitable repricing of stocks that were artificially boosted by flows into passive, low-fee products”.

Craig Callahan, president and founder of Icon Advisors, said oil’s bear market has weighed heavily on the market in general, but that has created buying opportunities for value investors. “I’m considering adding to my holdings in the energy sector,” he said.

“Inevitable” China recession to hit rest of world

Kenneth Rogoff, professor of economics and public policy at Harvard University and former chief economist of the International Monetary Fund, wrote last week that a growth recession in China is inevitable and that it is likely to have a major global impact.

“A recession in China, amplified by a financial crisis, would constitute the third leg of the debt supercycle that began in the US in 2008 and moved to Europe in 2010,” he wrote.

Rogoff added that “a Chinese slowdown that spreads across Asia could paradoxically lead to higher interest rates elsewhere”.

In the US, this could “cause debt service to crowd out needed expenditures in other areas”.

Dick Bove, chief financial strategist at Rafferty Capital Markets, also said last week that higher interest rates could cause a recession in the US, but suggested that it would be mainly due to the Federal Reserve's interest rate hikes.

However, Sri Kumar, president of Sri-Kumar Global Strategies, said that it is too late for the Fed to change course. “It is already baked in in terms of the future outlook of the economy,” he said.

“The Chinese developments with respect to debt, with respect to the trade war, are going to have a much bigger impact on 2019 than the Fed anticipates,“ he said.

Stocks fall, oil in bear market

Markets fell on Friday.

The S&P 500 fell 0.9 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 1.1 percent.

“Though the mid-term elections are over, worries that the U.S.-China trade war will drag on for the long term are lingering,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Oil fell. West Texas Intermediate crude fell 1.7 percent, its ninth consecutive decline, leaving it 20.6 percent below its recent peak and in bear market territory.

“Oil being down could be a sign that the global economy is in a tough spot,” said Willie Delwiche, investment strategist at RW Baird.

And it is not just oil. Gasoline, copper and platinum have also been declining.

“When you get these signals, it's hard to see equities continue to move up on their own,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies.

Markets mixed as Fed leaves rates unchanged

Markets were mixed on Thursday.

The S&P 500 fell 0.3 percent while the STOXX Europe 600 rose 0.2 percent. Earlier in Asia, the NIkkei 225 surged 1.8 percent but the Shanghai Composite fell 0.2 percent.

The Federal Reserve left interest rates unchanged at its monetary policy meeting on Thursday.

Charlie Ripley, senior investment strategist at Allianz Investment Management, called the Fed meeting a “non-event”.

Meanwhile, Michael O’Rourke, chief market strategist at JonesTrading, said that the Wednesday rally “has the hallmarks of bear-market rally­­­ — a strong move on light volume thanks to a hollow catalyst”. “Other market headwinds will be reasserting themselves soon enough,” he said.

William Watts at MarketWatch suggested that the “smart money” is not buying into the rally in November.

Watts cited analyst Brian Reynolds of Canaccord Genuity as saying that the so-called smart index, which compares stock-market flows in the first half-hour of trade versus flows in the last half-hour, remains weak and indicates “a retest of the recent lows before stock prices fully regain their uptrend”.

Markets rise after US elections leave Congress divided

Markets were mostly higher on Wednesday.

The S&P 500 surged 2.1 percent and the STOXX Europe 600 rose 1.1 percent but the Nikkei 225 fell 0.3 percent.

US stocks rose after midterm election results showed the Democratic party gaining control of the House of Representatives even as the Republican party strengthened its grip on the Senate, leaving a divided Congress.

Mark Decambre at MarketWatch looked at the ways that the election results may affect markets.

Markets mixed but “to head higher into early next year”

Markets were mixed on Tuesday.

The S&P 500 rose 0.6 percent but the STOXX Europe 600 fell 0.3 percent.

Earlier in Asia, the Nikkei 225 jumped 1.1 percent but the Shanghai Composite fell 0.4 percent.

Some analysts see optimistic signals in the charts.

John Kosar, the chief market strategist at Asbury Research, said an increase of put option volume compared with call option volume is reversing from a level that indicates maximum bearishness to one that represents a more upbeat outlook for US stocks.

According to Kosar, this is one of the clearest signals that a bottom in the market has been achieved.

Jonas Elmerraji said that negative Octobers tend to be followed by big rallies in the months that followed, so last month's selloff “could actually set the stage for a path to new highs in the months ahead”.

Similarly, JP Morgan's head of global fixed income and U.S. equity technical strategy Jason Hunter said “this is a late-cycle correction and not a bear market” and is “confident that the market is going to head higher into early next year”.

Global stocks face bear market risk as Fed drains balance sheet

Markets were mixed on Monday.

The S&P 500 rose 0.6 percent but the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 plunged 1.5 percent.

“Investors face a wall of worry,” said Peter Bye, portfolio manager at UBS Asset Management, who noted “increasing evidence of pressure on tech leaders”.

Meanwhile, Richard Suttmeier wrote that the stock market will not rally for long with the Federal Reserve cutting its blance sheet.

“Between October 26 and November 2, the yield on the 10-year note rose from 3.06% to 3.224% as the Federal Reserve drained a massive $33 billion off its balance sheet,” he said. “Another $50 billion is scheduled to be the reduction each month through the year 2020. This risks a bear market for stocks around the globe.”

Hussman: October decline a mild warning shot

Last week, the S&P 500 rose 2.4 percent, rebounding after recent declines and sending it back into positive territory for 2018.

However, John Hussman does not think the worst is over. In his latest article, he wrote: “Let’s be clear. October’s market decline was a rather mild warning shot.”

“The advance of recent years has produced a toxic combination of extreme valuations in every conventional asset class, coupled with a breathtaking mountain of low-grade debt issued by Wall Street...to satisfy the yield-seeking speculative demand of investors,” he said.

For US stocks in particular, Hussman said that valuations based on “our Margin-Adjusted CAPE, which is substantially better correlated with actual subsequent market returns than Robert Shiller’s raw cyclically-adjusted P/E...have retreated only to the level they reached in November 2017, matched in history only by the 3 weeks surrounding the 1929 market peak”.

While valuations are informative about long-term returns but less so about short term trends, Hussman also noted that market internals, a measure of investor inclination towards speculation or risk-aversion, “shifted to a negative condition on February 2, and have remained unfavorable since then”.

“Presently, neither valuations nor internals are favorable, and that is what opens up a trap door under the market,” he said.

“Over the completion of the current market cycle, I fully expect the S&P 500 to lose close to two-thirds of its value from the recent peak,” he warned.

US stocks fall as trade concerns return

Markets were mixed on Friday.

The Nikkei 225 soared 2.6 percent and the STOXX Europe 600 rose 0.3 percent but the S&P 500 fell 0.6 percent.

US stocks fell after President Donald Trump's top economic adviser, Larry Kudlow, said the US and China were a long way from reaching a trade deal.

“If the two largest economies in the world can’t agree on trade policy, that’s not great for markets,” said Thomas Hainlin, global investment strategist with US Bank.

A report on Friday showed that the US economy added 250,000 new jobs in October.

“This is a great jobs report,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.

The jobs report also showed that year-over-year wage gains rose to 3.1 percent from 2.8 percent, which could fuel inflation concerns.

The US 10-year Treasury yield rose to 3.22 percent after the report.

US stocks jump as manufacturing index falls

Markets were mostly higher on Thursday.

The S&P 500 jumped 1.1 percent and the STOXX Europe 600 rose 0.4 percent. However, the Nikkei 225 fell 1.1 percent.

Jeff Carbone, co-founder of Cornerstone Wealth Group, said that “we’re seeing a bottoming process”.

“White House economic adviser Kudlow said that more tariffs on China are not ‘set in stone’, which may have boosted somewhat further market sentiment,” wrote Charalambos Pissouros, senior market analyst at brokerage and investment firm JFD Brokers, in a note.

A report in the US on Thursday showed that the ISM manufacturing index fell to a six-month low of 57.7 in October from 59.8 in September.

CNBC's Jim Cramer thinks that a slowdown in manufacturing growth could lead the Federal Reserve to pause its interest rate hikes.

“I've been saying that we need to see the Fed or the president blink in their respective battles against inflation and China. Neither one blinked today, but ... we got a glimpse of how things could go right and it sent stocks flying,” said Cramer.

“Massively oversold” stocks rebound but trend seen “terrible”

Markets rose sharply on Wednesday.

The S&P 500 rose 1.1 percent, the STOXX Europe 600 jumped 1.7 percent and the Nikkei 225 surged 2.2 percent.

Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, said that “we’re back to looking at the fundamentals, which are very attractive”.

Tom Essaye, president of the Sevens Report, said that the “shock of last week’s earnings disappointment is behind us”.

Tom Lee, managing partner at Fundstrat Global Advisors, said that “we are massively oversold” and that “we would be aggressive buyers”.

Martin Fridson, chief investment officer of Lehmann Livian Fridson Advisors, noted that the high-yield bond market is not showing signs of cracking.

“Perhaps the high-yield market did not pick up recessionary vibes sooner than the stock market did because there were no such vibes,” said Fridson.

However, Jeff deGraaf, chairman of research firm Renaissance Macro Research, called the stock market rebound “uninspiring”.

“These are bounces in terrible trends, and are high probability failures in the near-term, but whether days or weeks is hard to say,” he said.

Markets rebound but still “going into a bear market”

Markets were mostly higher on Tuesday.

The S&P 500 surged 1.6 percent and the Nikkei 225 jumped 1.4 percent while the STOXX Europe 600 was flat.

Stocks may not be out of the woods though.

“We are seeing an oversold technical rally before we head even lower,” said Sam Stovall, chief investment strategist at CFRA.

“Unfortunately, I don’t foresee this volatility easing too much over the next few weeks,” said Kristina Hooper, chief global market strategist at Invesco.

“Honestly, I don’t see the low being put in yet and I think we’re going to go into a bear market,” prominent market technician Ralph Acampora told MarketWatch.

In contrast, Hayes Martin, president of advisory firm Market Extremes, said that there is “a tremendous surge in pessimism” and sees “a powerful trading bounce” soon.

US stocks reverse gains, “breakdown still intact”

Markets were mixed on Monday.

The STOXX Europe 600 rose 0.9 perccent but the S&P 500 reversed early gains to close 0.7 percent lower. Asian stocks were mostly lower, with the Shanghai Composite in particular plunging 2.2 percent.

A report that President Donald Trump’s administration is prepared to announce tariffs on remaining Chinese imports if talks next month between Trump and Xi Jinping do not yield results renewed concerns over the US-China trade war.

Many analysts see further declines ahead.

Jesse Colombo, economic analyst and registered investment adviser at Clarity Financial, said: “Last week’s important technical breakdown is still intact.”

Stephen Auth, chief investment officer at Federated, said “it’s hard to see a sustained rally for the next few weeks”.

However, some analysts see a renewal of the stock market rally after the near-term decline.

Tony Dwyer, equity analyst at Canaccord Genuity, said that “our positive fundamental thesis...remains in place”.

However, Dwyer does not expect a V-shaped recovery, noting that with no imminent catalyst to push stocks up, “the bottoming process is going to feel awful”.

Nearly half of S&P 500 in bear market

Last week, the S&P 500 fell 8.8 percent. That left it in negative territory for 2018.

CNBC reported on Friday that more than 43 percent of the S&P 500 stocks were in a bear market, having fallen at least 20 percent from 52-week highs.

The report cited Chantico Global CEO Gina Sanchez as saying that a flight to value stocks could be the best way to weather any more turbulence.

“Value has re-established itself finally as a leader in the market, and it's been a very long time since we've seen that, and I actually think that this run has some legs,” said Sanchez.

Not everyone agrees.

John Tobey wrote in Forbes: “This is a bear market.”

He said that “there are now doubts and uncertainties that are causing analysts and investors to rethink fundamental outlooks” and that “value investors and bargain hunters will not step in and buy just because a stock has fallen”.

Markets resume fall, recovery “will take some time”

Markets fell on Friday.

The S&P 500 plunged 1.7 percent, the STOXX Europe 600 fell 0.8 percent and the Nikkei 225 fell 0.4 percent.

Analysts at Singapore's OCBC Bank said in a morning note that “investors are likely to be still licking their wounds after the recent sell-off so any rebound is likely to be muted barring a fresh catalyst”.

A positive catalyst, however, appears elusive at the moment.

“All the macro issues, from higher interest rates to slowing growth in China are giving us a half-glass-empty situation regarding 2019 earnings,” said Alec Young, managing director of global markets research at FTSE Russell.

Still, some analysts remain undaunted.

“The market’s mood swings have been unsettling, but the underlying conditions that triggered the rout are unlikely to shatter the economic or earnings cycles. We think this will all sort out, but it will take some time,” said Kelly Bogdanova, vice president of portfolio advisory group at RBC Wealth Management.

Markets rebound as some see selling “overdone” but beware “rolling bear market”

Markets mostly rebounded on Thursday.

The S&P 500 rose 1.2 percent and the STOXX Europe 600 rose 0.5 percent.

Earlier, the Nikkei 225 plunged 3.7 percent following the US stock market's rout on Wednesday.

The European Central Bank left interest rates unchanged at its monetary policy meeting on Thursday and reaffirmed its plan to end its asset-buying programme in December provided data shows inflation remains on track to eventually meet its target.

Some analysts remain hopeful for further gains for stocks.

“From a valuation standpoint, the market is very affordable after Wednesday’s declines, and the economic fundamentals remain really solid,” said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.

Tom Essaye, president of the Sevens Report, wrote in a note that “at this point the selling is overdone”.

Michael Brush wrote in his MarketWatch column that “it's too late” to sell.

“Recessions are what normally kill bull markets — and a recession is not likely for at least a year or more,” he said. “So the current sell-off gives you a chance to buy stocks at better valuations.”

Other analysts think the market is likely to be rocked by more waves of selling before reaching a bottom.

“We're a ways from a bounce,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group.

Indeed, Michael Wilson, Morgan Stanley’s chief US equity strategist, said that current conditions represent a “rolling bear market”. “Risk-reward remains unattractive for us,” he said.

S&P 500 plunge into red for year

US stocks fell sharply on Wednesday.

The S&P 500 plunged 3.1 percent, its sixth consecutive decline and leaving it in negative territory for 2018. The Dow Jones Industrial Average tumbled 2.4 percent and the Nasdaq Composite sank 4.4 percent.

Elsewhere, the STOXX Europe 600 fell 0.2 percent but the Nikkei 225 rose 0.6 percent.

According to Craig Johnson, chief market technician at Piper Jaffray, the US stock market could see more weakness ahead.

“I think it's going to be another 5 to 10 percent lower from here and it's probably going to take about 14 to 16 weeks to work out itself out,“ said Johnson.

“The market selloff has taken on a life of its own and selling is begetting more selling, but so far we haven’t seen a capitulation moment, so I’m taking a more cautious approach,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

“I think profit growth has topped out and will definitively slow going forward, contributing to the next recession, likely early in the next decade,” Mark Zandi, chief economist at Moody’s Analytics.

However, some analysts remain optimistic.

“Good news in my mind is valuations have become much more attractive here with the S&P 500 trading at about 15 times next year’s estimates,” said Art Hogan, chief market strategist at B. Riley FBR Inc.

Markets fall amid signs of “cyclical top”

Markets fell on Tuesday.

The S&P 500 closed 0.6 percent lower despite trimming earlier sharp losses, its fifth consecutive decline.

The STOXX Europe 600 plunged 1.6 percent after the European Commission asked the Italian government to rework its budget.

Earlier in Asia, the Nikkei 225 plunged 2.7 percent while the Shanghai Composite sank 2.3 percent.

Caterpillar and 3M contributed to the early gloom in the US by providing disappointing earnings reports ahead of Tuesday's opening bell.

“It’s industrials like Caterpillar that struggle when you’re at a cyclical top,” said Mike O’Rourke, chief market strategist at JonesTrading.

Brad McMillan, chief investment officer at Commonwealth Financial Network, noted that “almost all the news we see every day is bad”, adding that the “surprise is not that markets are reacting; it is that markets did not react sooner and that they have not reacted harder”.

Similarly, Sam Stovall, the chief investment strategist at CFRA, said that there have been problems with stocks in all of the economically sensitive sectors and that analysts have been slow to react. “They've maintained their optimistic earnings forecasts.”

Jim Paulsen, chief investment strategist at Leuthold Group said that companies are reporting weakening sales and crimping margins. “If those are true then the numbers on 2019 earnings estimates are wrong.”

Paulsen added that if investors “suddenly see the valuation case going away, that certainly is concerning”.

China stocks soar but US correction may not be done yet

Markets were mostly lower on Monday.

The S&P 500 fell 0.4 percent and the STOXX Europe 600 fell 0.4 percent.

US and European investors largely ignored gains earlier in Asia. The Shanghai Composite soared 4.1 percent while the Nikkei 225 rose 0.4 percent.

In Europe, investors remained focused on Italy after Moody’s Investors Service downgraded Italy’s sovereign debt rating by one notch to Baa3 late on Friday.

In the US, Michael Wilson, an equity strategist at Morgan Stanley, warned in a report that the recent rebound “was a dead cat bounce”. He added: “We don’t think the correction is done yet”.

In contrast, JC O’Hara, chief market technician at MKM Partners, believes that the bulk of the selling is over. “A close above 2,825 will nullify the bear case,” he said.

However, even the usually-bullish Wharton School finance professor Jeremy Siegel has become less enthusiastic about stocks.

“There are challenges that we face now,” he told CNBC on Monday. “I'm looking flattish” for 2019.

US corporate results show “troubling signs” as global economic outlook downgraded

A MarketWatch article has noted “troubling signs” in the latest US corporate earnings reports.

While about three-quarters of the 140 companies that have reported third-quarter earnings beat Wall Street’s estimates for net profit, Bespoke Investment Group noted that “just 58% of companies have beaten revenue estimates, which would be the weakest reading seen in six quarters”.

“In aggregate, companies are reporting sales that are 0.5% above estimates, which is below the five-year average,” reported John Butters, senior earnings analyst at FactSet.

Meanwhile, Reuters polls of more than 500 economists taken this month has shown that the outlook for 18 of 44 economies polled have been downgraded. The outlook for 23 were unchanged while three were marginally upgraded.

“A U.S. Federal Reserve that is raising interest rates to prevent the U.S. economy from overheating is constraining the policy options of countries where financial conditions are tightening and trade tensions intensifying,” wrote Janet Henry, global chief economist at HSBC.

Neil Shearing, group chief economist at Capital Economics, said that the global trade war “would inflict lasting damage to growth and cause a permanent loss of output”.

“The dominant downside risk to the global outlook remains the Trump Administration’s attempt to rebalance trade with China through tariff policy,” said Jean-François Perrault, chief economist at Scotiabank.

US market flat, China surges but bull market may have “peaked”

Markets were mixed on Friday.

The S&P 500 was flat while the STOXX Europe 600 dipped 0.1 percent.

Earlier in Asia, the Nikkei 225 fell 0.6 percent but the Shanghai Composite surged 2.6 percent.

The rebound in the Chinese stock market came just a day after it hit a four-year low, when it closed 30 percent below its 52-week high.

The bearish trend in China does not bode well for the US stock market. According to a CNBC article, US stocks are more often weaker when the declines in Chinese stocks are large.

“Everyone accepts that earnings growth will slow next year and that interest rates are going to rise,” said Alec Young, managing director of global markets research at FTSE Russell. “I think there’s a chance that the bull market has peaked.”

Markets tumble but analysts look for year-end rally

Markets fell on Thursday.

The S&P 500 tumbled 1.4 percent and the STOXX Europe 600 fell 0.5 percent. Earlier in Asia, the Nikkei 225 fell 0.8 percent and the Shanghai Composite plunged 2.9 percent.

While many analysts see continued volatility ahead, some remain sanguine for the longer term.

Bruce Bittles, chief investment strategist at Baird, said that “so far this looks to be a correction that could carry further, setting up the possibility for a year-end rally later on”.

Ryan Detrick at LPL Research said: “Importantly, markets can be jittery ahead of major events like elections. Once the uncertainty is resolved in November, solid fundamentals and strong seasonals could take over for a nice year-end rally.”

Analysts at JP Morgan led by Dubravko Lakos-Bujas wrote in a note that an earnings-related pause in corporate stock buybacks is contributing to the stock market’s October selloff. “With the largest one-way buyer returning in size to the market post earnings, we expect liquidity to improve and equities to move higher,” they wrote.

Other analysts are less optimistic.

Steve Grasso, director of institutional sales at Stuart Frankel, said that if growth stocks continue to fall, “that's the end of the bull market right there”.

Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments, said: “Cash is still in the running to be king, if not this year, certainly next.”

Stocks may see another sell-off but “bonds are the bubble”

Markets were mixed on Wednesday.

The Nikkei 225 jumped 1.3 percent following the surge in US stocks on Tuesday but later on Wednesday, the STOXX Europe 600 fell 0.4 percent and the S&P 500 closed little-changed.

Jeff Carbone, co-founder of asset management firm Cornerstone Wealth Group, said that “when you look at the fundamentals of the economy and the market, we expect the market to ultimately move upward”.

In the meantime, though, many analysts think that stocks could see another sell-off.

“This is the second decline of this year of 5 percent or more and two out of every time we had more than one decline in a year, the second decline was sharper than the first,” said Sam Stovall, chief investment officer at CFRA.

“I don't think we're going to hit any new highs this year, and I do expect a lot of turbulence,” said Kristina Hooper, chief global market strategist at Invesco.

However, Leon Cooperman, CEO of Omega Advisors, said that the US economy is, “if anything, too strong”, and that the “conditions that normally lead to a big decline just aren't present”.

“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC.

Markets jump but “strongest gains behind us”

Markets rose sharply on Tuesday.

The S&P 500 soared 2.2 percent, the STOXX Europe 600 surged 1.6 percent and the Nikkei 225 jumped 1.2 percent.

Jim Smigiel, chief investment officer of absolute return strategies at SEI, said that “the strongest gains in equity markets are behind us” and that “chances of a surprise on the upside are lower than on the downside”.

Howard Gold wrote in MarketWatch that the recent sell-off is just another pullback or correction but warned that if it turns into a 10 percent decline, “this nearly decade-old bull market is really in trouble”.

Meanwhile, Urban Carmel, the writer behind the Fat Pitch blog and ex-president of UBS Securities in Asia, thinks that a “topping pattern” is under way for the S&P 500 and that the recent selloff has not entirely run its course.

However, Carmel also said that a bear market is “the least likely outcome”.

Markets mixed as pullback seen having further to go

Markets were mixed on Monday.

The S&P 500 fell 0.6 percent, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 plunged 1.9 percent.

While many analysts remain sanguine, some think that the current stock markett pullback has further to go.

“More time and downside tests may be needed for a firm market low,” said Stephen Suttmeier, a technical research analyst at Bank of America Merrill Lynch.

“We find it unlikely there will be a V bottom given the sharpness and breadth of the correction,” said Tony Dwyer, chief market strategist at Canaccord Genuity.

Michael Santoli at CNBC said that “the pain trade is to the downside — or, perhaps most diabolically, up first and then down harder”.

Santoli quoted Jeff deGraaf of Renaissance Macro Research as saying that “the playbook would be to see equities bounce further, challenge a new high (if not make one) before puking again”.

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.”

US stocks rebound as investors stick with equities

Markets were mixed on Friday.

The S&P 500 jumped 1.4 percent and the Nikkei 225 rose 0.5 percent but the STOXX Europe 600 fell 0.2 percent.

Michael Arone, chief investment strategist for State Street Global Advisors, said that the acceleration in the US stock market's gains towards the close “indicates that investors are confident about the economy.”

David Madden, market analyst at CMC Markets, said that “higher interest rates aren’t the end of the world” and are, in fact, “warranted when the economy is strong”.

Investors may be thinking the same. According to FactSet, equity-based exchange-traded funds have seen positive flows over the past week while fixed-income ETFs saw outflows.

Global markets plunge with investor sentiment as they face “perfect storm”

Markets fell on Thursday.

The S&P 500 tumbled 2.1 percent, the STOXX Europe 600 fell 2.0 percent and the Nikkei 225 plunged 3.9 percent.

“It is becoming clear that global equity markets are facing a perfect storm of headwinds such as rising U.S. bond yields, U.S.-China trade disputes, global growth concerns and prospects of higher U.S. interest rates,” said Lukman Otunuga, research analyst at FXTM.

Charlie Ripley, senior investment strategist for Allianz Investment Management, said that “we are witnessing the repercussions in the markets as the Fed takes the punch bowl away from the party”.

Markets are falling as individual investors grow bearish. The latest AAII survey showed that 30.6 percent of individual investors described themselves as bulls, down by a steep 15.1 percentage points from the previous week, while bearish investors rose by 10.3 percentage points to 35.5 percent.

Mark Yusko, founder and chief investment officer at Morgan Creek Capital, said that stocks would have to fall 40 to 50 percent to reach fair value.

“If interest rates keep normalizing, if liquidity keeps falling, if earnings go to where I think they are going to go, which is lower, I think we are going to have a meaningful correction,” he said.

However, Jim Paulsen, chief investment strategist at The Leuthold Group, is not convinced that this is the start of a bear market and suggested that “maybe in the not too much distant future it might be time to get aggressive again for one last run in this bull”.

Indeed, Jeffrey Hirsch, editor-in-chief of Stock Traders Almanac, noted that Octobers have also been a time of turnaround. “Midterm election years Octobers are downright stellar thanks to the major turnarounds," said Hirsch.

US stocks plunge as investors see no safety in bonds

Markets were mostly down on Wednesday.

The S&P 500 plunged 3.3 percent, falling for the fifth consecutive day, its longest losing streak since November 2016.

Elsewhere, the STOXX Europe 600 tumbled 1.6 percent but the Nikkei 225 rose 0.2 percent.

Despite the sharp fall in US stocks, some analysts remain sanguine.

Brad McMillan, chief investment officer at Commonwealth Financial Network, described the market’s decline as “normal volatility” and said stocks were “past due for a pullback”.

Terry Sandven, chief equity strategist at US Bank Wealth Management, said that “U.S. equity markets are becoming oversold and due for a rebound”.

However, other analysts noted that the sharp sell-off in stocks occurred even as investors have been selling US Treasuries, typically seen as a safe-haven.

“There's no flight to safety in bonds. That's a sea change,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Art Hogan, chief market strategist at B. Riley FBR, suggested that the “best way to be defensive now is to raise cash”.

Technical analysts also see worrisome signs.

“The selling is a result of selling the best performing stocks this year and it is difficult to time when that selling pressure will slow,” said JC O'Hara, chief market technician at MKM Partners.

“What's concerning is that we saw the index break below its January high with narrowing breadth and not getting a confirmation of the most recent high by several momentum gauges,” said Andrew Thrasher, portfolio manager at The Financial Enhancement Group and founder of Thrasher Analytics.

Markets mixed as higher interest rates expected

Markets were mixed on Tuesday.

The S&P 500 fell 0.1 percent but the STOXX Europe 600 rose 0.2 percent.

Earlier in Asia, the Nikkei 225 plunged 1.3 percent but the Shanghai Composite rose 0.2 percent.

While the International Monetary Fund has cut it growth forecast for the global economy, analysts mostly still see higher interest rates ahead.

“We continue to believe the curve should flatten as the Fed continues on their tightening path and see real money demand for the long-end offsetting higher supply,” Mark Cabana, a rates strategist at Bank of America Merrill Lynch, said in a report.

Mike Wilson, equity strategist at Morgan Stanley, said that the rise in interest rates would cap stock market gains and lead to intramarket rotations.

“With S&P 500 upside capped on a valuation basis, it's more likely that Value outperforms by going down less or simply not going down,” he wrote.

However, Bank of America Merrill Lynch equity strategists think that bonds will become more attractive than stocks only when the 10-year Treasury note yield reaches 5 percent.

Stocks plunge in China and Europe, broader US market “continues to deteriorate”

Markets fell on Monday.

The S&P 500 fell less than 0.1 percent but the STOXX Europe 600 tumbled 1.1 percent and the Shanghai Composite plunged 3.7 percent.

Chinese stocks fell despite the People's Bank of China cutting banks’ reserve-requirement ratios by one percentage-point.

The sell-off in China pushed down stocks in Europe that were already weighed down by concerns over a budget clash between Italy and the European Union.

While the US stock market was relatively steady, Bruce Bittles, chief investment strategist at Baird, noted: “The technical underpinnings of the equity markets argue on the side of caution. Despite new highs by the S&P 500 and Dow Industrials just a few days ago, the broad market continues to deteriorate.”

Some investors turning from US stock market to emerging markets

The S&P 500 fell 1 percent last week, its second consecutive weekly decline.

Investors may be becoming nervous about the US stock market.

Last week, John Hussman wrote that “investors are becoming increasingly selective...their psychology has subtly shifted away from speculation, and toward risk-aversion”.

As evidence, Hussman pointed out that “recently, the 2% advance of the S&P 500 Index beyond its late-January high has been accompanied by a sharp narrowing of participation and leadership across individual securities”.

Some investors may be looking for better returns elsewhere.

A report from Reuters said: “Portfolio managers from Harding Loevner, Federated Investors, and Wells Fargo are among those who have been adding emerging markets stocks to their portfolios in the face of the imposition of import tariffs by President Trump and rising interest rates in the U.S.”

“We’re finding opportunities because of the trade war,” said Chris Mack, a portfolio manager of the Harding Loevner Global Equity fund.

“People are slow to come around to the realization that the U.S. isn’t going to close its borders to all emerging markets,” said Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management.

Markets fall as US employment rises less than expected

Markets fell on Friday.

The S&P 500 fell 0.6 percent, the STOXX Europe 600 fell 0.9 percent and the Nikkei 225 fell 0.8 percent.

The US employment report showed that the economy created 134,000 jobs in September, less than expected, but the unemployment rate fell to 3.7 percent.

“Wages are definitely trending higher,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“I do think that if wages keep heating up, that will give the Fed more ammunition to raise rates,” said Michael Matousek, the head trader at US Global Investors.

Markets fall, US stock market “dangerously overvalued”

Markets fell on Thursday.

The S&P 500 fell 0.8 percent, the STOXX Europe 600 fell 1.1 percent and the Nikkei 225 fell 0.6 percent.

“We’ve had really strong data and commentary from Fed officials, which is bullish for equities, but that comes with the side effect of having people think we should expect more inflation and interest-rate increases, which in turn is a negative for equities,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab.

Still, Nikolaos Panigirtzoglou, a strategist at JPMorgan Chase, is maintaining his bullish view on equities. “We still recommend investors to be overall overweight equities vs bonds,” he said.

However, Hayes Martin, president of Market Extremes, thinks that the US stock market is headed for a decline in the range of 8 to 13 percent.

Meanwhile, James Berman, president and founder of JBGlobal.com LLC, thinks that the US stock market is now “dangerously overvalued” and that it is time to switch to emerging markets.

Markets mixed, oil hits four-year high

Markets were mixed on Wednesday.

The S&P 500 rose 0.1 percent and the STOXX Europe 600 rose 0.5 percent but the Nikkei 225 fell 0.7 percent.

The US 10-year Treasury yield rose 11 basis points to 3.166 percent while oil rose to the highest since late 2014.

“Risk appetite has picked up recently in part because of stronger economic data and also because of progress made on trade between the U.S. and its neighboring countries, Mexico and Canada,” said Charlie Ripley, senior investment strategist at Allianz Investment Management, in a note.

However, Jason Goepfert, president of Sundial Capital Research, noted that market breadth has been weak despite the rally.

“When we’ve seen these kinds of ‘split’ breadth conditions in the past, the risk/reward in stocks was unfavorable over the next 2-12 months,” Goepfert said.

US stock market getting bearish signals amid “bullish tailwinds”

The S&P 500 was flat on Tuesday.

Some technical indicators are pointing to further trouble ahead for US stocks.

One is that while the S&P 500 rose in September, small cap stocks fell, with the performance gap between the blue-chip index and the S&P Small Cap 600 in particular being unusually wide.

Jodie Gunzberg, managing director and head of US equities at S&P Dow Jones Indices, wrote that “there may be a bearish signal from the inability of small-caps to keep up with the large-cap momentum”.

Meanwhile, another indicator, investors' cash allocations, have dropped to “rock-bottom” levels, according to Callum Thomas, founder of research firm Topdown Charts.

“Basically where cash allocations are at this point is entirely consistent with the type of signs you see toward the end of a market cycle,” said Thomas.

In contrast, Jim Cramer at CNBC said that the US stock market may be getting a boost from “two hugely bullish tailwinds”: a cyclical boom in hiring and a widespread stock shortage resulting from mergers, acquisitions and corporate buybacks.

Markets rise as US win streak looks set to continue amid overvaluation

Markets rose on Monday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 0.5 percent.

Markets were boosted by news that the US and Canada had reached an agreement on Sunday night on revising the North American Free Trade Agreement.

Sue Chang at MarketWatch said that after a six-month win streak, the US stock market “can keep on rolling if the past is any indicator”.

She cited data from Bespoke Investment Group showing that when the S&P 500 has risen for six consecutive months between April and September, the stock market has gone on to notch strong gains for the rest of the year.

Still, Vitaliy N. Katsenelson, chief investment officer at Investment Management Associates, warned that the average stock is overvalued somewhere between tremendously and enormously.

US stock market rally continues as rest of the world falters

The S&P 500 finished flat on Friday, the last day of September, but that was enough for it to finish the month up 0.4 percent. It also completed a 7.2 percent gain for the third quarter.

Sam Stovall, chief investment strategist at CFRA, said that the average fourth-quarter gain for the S&P 500 since World War II has been 4.1 percent, but if the third quarter is positive then the fourth quarter has seen the index "up 3.8 percent on average, and the market rose 82 percent of the time".

In contrast to the US stock market, the rest of the world has done very badly, with some markets falling into bear territory.

Stocks rebound in US, tumble in Japan

Markets were mixed on Thursday.

The S&P 500 rose 0.3 percent and the STOXX Europe 600 rose 0.4 percent but the Nikkei 225 fell 1.0 percent.

“Treasury yields have dropped off since the Fed meeting, taking some of the recent pressure off of stocks and enabling indices to rebound,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Further gains for stocks may be limited though, the approaching mid-term election notwithstanding.

Brian Belski, chief investment strategist at BMO Capital Markets, said that while some investors have pointed out that the market typically stages a strong rally following the election, “we believe that investors may have already ‘pulled forward’ any anticipated post-midterm election bump”.

Markets mixed as Fed raises rate, escalation of trade war could “take a terrible toll”

Markets were mixed on Wednesday.

The STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.4 percent.

However, the S&P 500 reversed early gains to end 0.3 percent lower.

The Federal Reserve announced a 25-basis point hike in its benchmark interest rate at its monetary policy meeting on Wednesday.

“The Fed is highly likely to raise interest rates 25 basis points per quarter until next summer, when the target rate will reach the committee’s estimate of neutral,” said Eric Winograd, senior economist at AllianceBernstein.

Trade continues to be a concern for markets.

UBS analysts said that if US tariffs on Chinese imports rise to 25 percent as threatened by US President Donald Trump, “the hit to the economy is substantial and comes quickly”, adding that the higher rates would “take a terrible toll on activity”.

In an alternative scenario analysed by ECB economists where the US raises tariffs on all of its imports by 10 percentage points and its trading partners retaliate with an equivalent tariff increase on their US imports, the US economy would shrink by around 2 percent in the first year compared with a situation in which nothing changes.

Markets mixed ahead of Fed decision

Markets were mixed on Tuesday.

The S&P 500 fell 0.1 percent but the STOXX Europe 600 rose 0.5 percent.

Earlier in Asia, the Nikkei 225 rose 0.3 percent but the Shanghai Composite fell 0.6 percent.

Most investors' eyes are on the Federal Reserve's monetary policy meeting, which is expected to announce an interest rate hike on Wednesday.

Justin Walters, strategist and co-founder of Bespoke, noted that the “S&P 500 has now fallen on four consecutive Fed Days dating back to March”.

However, he also noted that the biggest decline on the last four Fed Days was just 0.72 percent, “so at least the drops haven’t been extreme”.

Markets fall amid trade war fears and Fed rate hike expectations

Markets fell on Monday.

The S&P 500 fell 0.4 percent and the STOXX Europe 600 fell 0.5 percent.

In Asia, the Chinese and Japanese stock markets were closed but the Hang Seng plunged 1.6 percent following a report that China had cancelled planned trade talks with the US.

Bruce McCain, chief investment strategist at Key Private Bank, said that a pullback was expected after US stock markets hit records last week. There is also “a fear that tariffs could bring the economy down” and “a near-certainty that the Fed will raise rates this week”.

Meanwhile, oil prices rose on Monday after major oil producers at a producer meeting over the weekend declined to commit to an additional increase in crude output to address expected supply disruptions.

US stocks maintain bull run as Fed looks set for more rate hikes

US stocks hit record highs last week to confirm an intact bull market as well as a Dow Theory buy. The S&P ended the week up 0.8 percent.

This week, the Federal Reserve's monetary policy meeting will probably be the main focus of markets.

Joseph LaVorgna, chief economist of the Americas at Natixis, suggested that with the economy growing and inflation at or above target, “they're going to do more” rate hikes.

Albert Edwards, global strategist at Société Générale, thinks that the stock market may not be able to withstand further increases in interest rates though.

“The Citi Economic Surprise Index for the U.S. had slumped back towards zero. That convergence of expectations with the data normally means yields should have continued to paddle sideways around 2.8% — and yet we have seen this dramatic rise,” he said.

US stocks hit record high to signal Dow theory buy

Markets were mostly higher on Thursday.

In the US, both the S&P 500 and the Dow Jones Industrial Average hit record highs, gaining 0.8 percent and 1.0 percent respectively.

Elsewhere, the STOXX Europe 600 rose 0.7 percent but Asian markets were flat with both the Nikkei 225 and Shanghai Composite ending little-changed.

“Fundamentally and technically, the market is really strong right now,” said Paul Brigandi, managing director and head of trading for Direxion.

However, Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said that trade friction remains “an ever-growing threat to the world economy” and that “caution is warranted”.

Still, the new highs recorded by the US stock market on Thursday confirmed that the bull market remains intact.

Art Cashin, UBS director of floor operations at the New York Stock Exchange, said that the confirmation “should be a Dow theory buy signal” and “therefore you have six to nine months of a higher stock market”.

Markets rise but US stocks face trade and other headwinds

Markets rose on Wednesday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 jumped 1.1 percent.

Despite escalating trade tensions between the US and China, Matt Forester, chief investment officer of BNY Mellon’s Lockwood Advisors, said that “without any visible effect on economic data, investors are just looking through the noise”.

In contrast, strategists at JP Morgan see the trade war as a headwind for US stocks. “As half of the trade with China now may be subject to tariffs, there is an increasing probability of corporate earnings being revised lower, dampening the sentiment toward U.S. stocks,” said the strategists led by Marko Kolanovic.

Jack Ablin, chief investment officer at Cresset Wealth Advisors, said that the trade war adds to inflationary pressure that is already building. “The bond market is beginning to get a little concerned about it. Stocks are not there yet,” he said.

And all this comes at a time when the US stock market is already expensive. According to Jim Paulsen, chief investment strategist at The Leuthold Group, the median US stock price-earnings ratio is almost 50 percent more than at the top of the internet stock bubble in 2000.

Markets shrug off US-China trade war escalation

Markets rose on Tuesday.

The S&P 500 rose 0.5 percent, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 surged 1.4 percent.

Stocks rose despite an escalation in the US-China trade war as China announced tariffs of 5 to 10 percent on US$60 billion worth of US products after the US announced new tariffs on about US$200 billion in Chinese goods on Monday.

Robert Pavlik, chief investment strategist at SlateStone Wealth, said that “the U.S. economy is strong, earnings are healthy and confidence among consumers and investors remains high”. He is also hopeful that the trade dispute will be settled “amicably”.

US raises tariffs on Chinese imports, China to retaliate

The trade war between the US and China looks set to escalate.

On Monday, the US government announced that it will impose 10 percent tariffs on US$200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year.

On Tuesday, the Chinese government announced that it has no choice but to retaliate against the latest round of US tariffs.

"An intensification of the U.S.-China trade spat is a near-term negative for risky assets, raising the specter of an economically damaging trade war in which high tariffs are imposed on most or all U.S.-China trade," wrote Mark Haefele, global chief investment officer at UBS Wealth Management, in a note on Tuesday.

Signs of irrational exuberance amid rising trade war risk

The S&P 500 rose 1.2 percent last week, advancing in all five days. It is now just 0.4 percent below its record close.

Mark Hulbert at MarketWatch thinks that investors are starting to show signs of irrational exuberance.

Hulbert wrote at the end of last week that his Hulbert Nasdaq Newsletter Sentiment Index (HNNSI), his most sensitive barometer of investor sentiment in the equity market, stood at 64.9 percent, having risen in recent sessions to as high as 70.1 percent. In early August, this index had stood at minus 2.7 percent.

“This represents a significant shift towards irrational exuberance,” he said.

Ironically, this comes at a time when the risk of a trade war between the US and some of its major trading partners is rising.

According to JP Morgan, an escalating trade war “could become a major drag on earnings in 2019”.

The Federal Reserve Beige Book released last week noted that trade war concerns “had prompted some businesses to scale back or postpone capital investment” while input costs for businesses have “generally been rising more rapidly than selling prices”.

US stock market “highly priced but could get much more highly priced”

Markets were mostly higher on Friday.

The S&P 500 rose less than 0.1 percent while the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 jumped 1.2 percent.

Trade remained a concern. Richard Weeks, managing partner at VWG Wealth Management, said that “over the longer term a trade war could be very damaging”.

However, Weeks also said that “stocks still look better than bonds, and there are enough positives that you can’t be too negative”.

Nobel laureate Robert Shiller said that the stock market is “highly priced” but “could get much more highly priced”.

“It has something to do with our president, who is an exceptionally business-oriented president and who wants to deregulate and favors lower taxes,” he said.

Analysts at Société Générale are less enthused about US President Donald Trump's impact on the stock market going forward.

“The U.S. mid-term elections on 6 November might, in the end, prove to be the peak of this atypical U.S. market cycle, with fund managers starting to focus on the risk of a standstill for the U.S. government with no key reform agenda until the end of Trump’s mandate,” they wrote in a note.

US stocks gain on trade hopes but at risk of 5-20 percent decline

The S&P 500 rose 0.5 percent on Thursday, its fourth consecutive gain.

“U.S. officials reaching out to China saying they would be amenable to additional trade talks later this month—that’s all it took to get and keep the Dow up triple digits,” said Mark Esposito, chief executive of Esposito Securities.

However, John Thomas, chief investment officer of Global Wealth Management, is worried that markets may be “complacent” and underappreciate the impact of hte trade dispute.

Indeed, David Tepper, co-founder of Appaloosa Management, said that the current bull market is in the “late innings” and that stocks could drop 5 percent to 20 percent if trade tensions between the US and China increase.

“I don't think everything is discounted at this price right now,” he said.

Low unemployment and high corporate debt may be red flags for US economy

The S&P 500 finished little-changed on Wednesday, continuing its stabilisation this week after falling 1 percent last week.

JJ Kinahan, chief market strategist at TD Ameritrade, said that the recent selling had followed “a remarkable year and a half” but “I don’t see a tone change in the market; the numbers continue to point to a strong economy”.

Still, other analysts think the US economy is at risk of a recession.

Clarity Financial analyst Jesse Colombo wrote in a Forbes column that the US unemployment rate has fallen below 4 percent. Colombo wrote that historically, “when the U.S. unemployment rate falls under 4%, recessions follow soon after”.

Meanwhile, Steve Blitz, chief US economist at TS Lombard, thinks that the high debt levels of US corporations is a red flag. It leaves them vulnerable “if the equity market comes down a lot”.

Markets mixed, “upside looks limited”

Markets were mixed on Tuesday.

The S&P 500 rose 0.4 percent but the STOXX Europe 600 fell 0.1 percent. Earlier in Asia, the Nikkei 225 jumped 1.3 percent but the Hang Seng fell 0.7 percent.

The US stock market was boosted by the energy sector as oil surged over 2 percent.

However, Ray Dalio, co-chairman and co-chief investment officer of Bridgewater Associates, suggested that investors be “more defensive”.

Dalio said that the current economic cycle has about two years left to run, so for the stock market, the “upside looks limited”.

Dalio also said that the US tariffs on China are not “that big of a deal”.

Indeed, Andrew Kenningham, chief global economist at Capital Economics, said that the macroeconomic implications of the US-China trade conflict is likely to be limited.

Kenningham explained that “while China and the U.S. account for a combined 22% of world exports, bilateral trade between them accounts for just 3.2%”.

Markets rise, trade war impact on China "not significant"

Markets were mostly higher on Monday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 0.3 percent.

The Greater China markets, however, suffered losses, with the Hang Seng down 1.6 percent and the Shanghai Composite down 1.2 percent.

However, while China is mostly seen to be adversely affected by the ongoing trade conflict with the US, former People's Bank of China governor Zhou Xiaochuan thinks the impact on China will not be very large.

"We used a mathematical model to calculate the negative impact of the trade war. It is not very large, it is not significant. It is less than half a percent (of an) impact to the Chinese economy," said Zhou.

Also, Eric Fishwick, head of economic research at CLSA, said the trade conflict could push China to shore up both its economy and its geopolitical positioning towards winning even more global clout.

Stocks in “danger zone” or “extended meltup”?

The S&P 500 declined 1 percent last week, falling on all four trading days.

MarketWatch reported that Barry Bannister, head of institutional equity strategy at Stifel, wrote in a note that stocks are in “the danger zone” and that a bear market “within 6-12 months seems assured”.

According to Bannister, rising interest rates would be the catalyst for the bear market.

However, other analysts remain bullish.

Ed Yardeni, president of Yardeni Research Inc, told MarketWatch that “the market is still in the midst of an extended meltup”.

According to Yardeni, strong corporate earnings should help the market overcome concerns over the trade war and emerging markets.

Blackstone's investment strategist Joseph Zidle thinks there is a high probability the S&P 500 will break through 3,000 within the next couple of months, noting that “the fundamentals here are strong”.

B. Riley FBR's Arthur Hogan also sees further gains for the S&P 500. “I think technology will significantly outperform and probably be the lead sector in the S&P 500,” he said.

Markets mixed as US employment rises amid trade war with China

Markets were mixed on Friday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.1 percent.

Earlier in Asia, the Nikkei 225 fell 0.8 percent but the Shanghai Composite rose 0.4 percent.

A report on Friday showed that the US economy added 201,000 jobs in August, better than the downwardly-revised 147,000 in July.

However, that report was offset by news that US President Donald Trump was ready to escalate the US-China trade war by extending tariffs to virtually all Chinese imports into the United States.

Markets fall, correction “will take a long time to work through”

Markets fell on Thursday.

The S&P 500, the STOXX Europe 600 and the Nikkei 225 all fell 0.4 percent.

A JP Morgan team led by Marko Kolanovic, global head of macro quantitative and derivatives strategy, blamed the weakness in global markets mostly on a “risk-off” mode amid concerns about contagion from emerging markets.

Peter Kenny, market strategist at Kenny & Co, said that the decline “is very much a tech-centric reversion” and “is long overdue”. He added that the correction “will take a long time to work through”.

Indeed, strategists at Goldman Sachs have reported that its bull-bear indicator is indicating that the likelihood of a bear market occurring is at its highest point since around the mid-1970s.

Meanwhile, Gillaume Touze, CEO of Quadra Capital Partners, even suggests shorting US stocks.

“We believe that the volatility is going to very much remain,” Touze told CNBC on Thursday. “That volatility combined with political turmoil is making us overall short on the key markets, particularly the U.S. one.”

Markets fall as US trade deficit jumps

Markets fell on Wednesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 1.1 percent and the Nikkei 225 fell 0.5 percent.

Technology stocks bore the brunt of the falls. The Nasdaq Composite tumbled 1.2 percent.

“I don’t see any specific catalyst pushing tech lower, and it’s pretty quiet from the perspective of news about these stocks, which makes me think this is a classic sector rotation,” said Douglas DePietro, managing director for trading at Evercore ISI.

Trade remained a concern as a report on Wednesday showed that the US trade deficit jumped almost 10 percent in July.

David Madden, market analyst at CMC Markets UK, said that “today’s trade figures add creditability to Trump’s protectionist policies”.

Matt Miskin, market strategist at John Hancock Financial Services, still sees “further upside in stocks” but acknowledged risk from emerging market contagion.

Indeed, some analysts see the risk of a 5 percent pullback in stocks.

However, Canaccord Genuity's chief market strategist Tony Dwyer remained optimistic. “Through the year-end, we're going to have somewhere between a 5 and 10 percent gain,” he told CNBC.

Markets fall as volatility spikes

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 was flat.

However, the Shanghai Composite jumped 1.1 percent even as the Caixin/Market manufacturing PMI fell to 50.6 in August, its lowest level since June 2017.

Meanwhile, Brian Sozzi at TheStreet is optimistic about the US stock market, at least for September.

"While we may certainly see some profit-taking, a meltdown is unlikely given the fundamental backdrop of Corporate America," he wrote. "Stocks are soaring because profits are doing the same," he quoted Yardeni Research founder Ed Yardeni as saying.

Other investors may not share the optimism. Volatility rose on Tuesday, with the VIX jumping 9.5 percent.

"A set of reports hinting at slower economic growth, an inflation spurt, or perhaps a little of both could quickly bring a new era of failing fundamentals," Jim Paulsen of the Leuthold Group wrote in a note on Tuesday.

Markets mixed as trade concerns remain

Markets were mixed on Monday.

The STOXX Europe 600 rose 0.1 percent but the Nikkei 225 fell 0.7 percent. The US stock market was closed for a holiday.

Trade remained a concern after US President Donald Trump tweeted over the weekend that there “is no political necessity to keep Canada in the new NAFTA deal”.

“As we head into a new week and month, it is these concerns that will remain front and center of investors’ minds, along with increasing concerns about stability in emerging markets,” said Michael Hewson, chief market analyst at CMC Markets UK.

Similarly, Vishnu Varathan, head of economics and strategy at Mizuho Bank, said that “if Trump tightens the screws on China, (emerging markets) risks could flare up again, with EM Asia currencies perhaps bearing the brunt of the burn”.

After stock market rally in August, US face "very real" risk of slowdown

The US stock market saw its best August performance since 2014 last month, with the Dow Jones Industrial Average gaining 2.1 percent and the S&P 500 gaining 3 percent.

However, Economic Cycle Research Institute co-founder Lakshman Achuthan that a looming slowdown could cause a stock market sell-off.

"The slowdown is, I think, very real and will become more apparent in the coming months," he said. He added that during such slowdowns, "the risk, more often than not, is that you're going to see some sort of correction in the order of 10 to 20 percent".

Meanwhile, Mark Eibel, director of client investment strategies at Russell Investments, thinks that it is time to look outside the US.

"We just think it gets harder and harder from here in the U.S.," he said. "We like Europe, we like Japan," he added.

US stocks flat amid trade tensions and emerging market turmoil

Markets were mostly lower on Friday.

The S&P 500 was flat but the STOXX Europe 600 fell 0.8 percent while the Hang Seng led Asian markets down with a 1 percent decline.

While trade tensions continued on Friday, renewed turmoil in emerging markets also caused concern.

While the US stock market may have benefitted from its safe haven status, Mark DeCambre at MarketWatch noted that US stocks and volatility have been moving in lockstep lately, and that could be an ominous sign.