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Stocks are starting off the week by taking a break from this month's substantial rally, amid disappointing data about industrial activity and consumer sentiment, and potential anxiety over the Federal Reserve's Wednesday statement. But despite these concerns, along with a "mediocre" earnings season, one economist said he expects stocks will continue to grind higher.
Jerry Webman, chief economist of OppenheimerFunds, said there's no way the Federal Reserve will decide to raise interest rates in the October meeting. And for a December rate hike to come into play, economic data would have to strengthen significantly.
"They have no reason to move rates higher at this point," Webman said Tuesday on CNBC's "Futures Now." "I know they've got this lingering fear of financial stability somewhere being a problem. But they want to see the whites of its eyes before they start shooting."
And until central banks are well into tightening cycles, stocks will continue to see gains, Webman said.
Crude oil prices fell 2 percent Tuesday to their lowest level since late August as concerns over supply and demand continued to weigh on the market. Oil is now down 16 percent from its Oct. 9 high, and one expert warns the commodity could hit sub-$40 levels sooner than later.
"I think we're going to continue to go lower and hit $40 and then [retest the August low]," Andy Lipow said Tuesday on CNBC's "Futures Now."
For the president of Lipow Oil Associates, the crude oil market will remain under severe pressure as diesel fuel floods it "With the Chinese economy slowing down and less money being spent on construction, China is exporting more diesel fuel," he said. "Those supplies combined with the robust exports of diesel from Saudi Arabia and the U.S. have produced a glut of diesel fuel and jet fuel," Lipow added. "This is just bad news for the energy complex."
Yet for some traders, the biggest worry isn't the volatility that could be stirred by the reports, but rather a fact about the market's historical performance.
Using data going back to the creation of the S&P 500 in 1957, technical analyst John Kosar of Asbury Research found that "the fourth week of October, which is next week, is seasonally the weakest of the entire fourth quarter."
Suddenly, the greenback is looking a lot greener.
The U.S. dollar index soared more than 1 percent on Thursday, hitting its highest level since Oct. 2. The move was fueled by the decision from ECB President Mario Draghi to leave interest rates unchanged and hinted at further easing. But some experts warn that traders should use the rally as a rare opportunity to get short the currency ahead of next week's FOMC meeting.
"I would be very careful buying the U.S. dollar at this stage," Kathy Lien told CNBC's "Futures Now" on Thursday. According to Lien, recent government data shows a lot more weakness than strength in the U.S. economy, which means the Fed's "hands are tied" in terms of raising interest rates in the near term. "The FOMC is the perfect catalyst for [a move lower] in the dollar."
Crude oil prices are down this week as uncertainties over China's economic growth and oversupply continue to weigh on investors. Oil is now down more than 10 percent from its October high of $50.92, and according to one expert, a "pile up" of bearish factors this week could spark the next leg lower.
"A meeting of OPEC and non-OPEC oil producing countries on Wednesday should end in disarray, leading to another round of selling," John Kilduff told CNBC's "Futures Now" on Tuesday. OPEC is hosting a special technical meeting on Wednesday, and while Kilduff expects it to be a nonevent, he does suspect it could result in "more protestation from Venezuela and countries getting hurt the worst," which will continue to put pressure on the commodity.
Furthermore, Kilduff anticipates this week's EIA inventory report to show another "substantial" number. "You're going to get a big crude inventory build in the weekly report. That's going to be a downward catalyst," said the CNBC contributor.
Third-quarter earnings season has begun, and the numbers do not look great. While 71 percent of the first 58 S&P 500 companies to report have beaten analysts' estimates, overall earnings are still expected to slide 3.9 percent versus the third quarter of 2014, according to Thomson Reuters data.
Those figures "blend" reported results with analysts' expectations of earnings yet to be released. Meanwhile, revenues are set to decline 3.7 percent.
But amid the apparent weakness, three specific industries within the S&P 500 Index are expected to see their earnings rise by about 50 percent year-over-year: automobiles, airlines, and construction materials.
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