Market Insider

Despite Tuesday bounce, stocks have further to correct - strategists

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U.S. stocks have some powerful negatives tugging at them, not the least of which are the Shanghai "panda bear" market and a global commodities rout.

But there is also the Fed, and it meets Tuesday and Wednesday amid shaky markets. While the U.S. central bank is not expected to take any action or make any major new comments, some traders expect its statement to sound hawkish to a nervous market as the Fed moves toward its first rate hike in nine years. Positive tones on the U.S. economy from the Fed could be a positive for stocks, even though it could signal a rate hike ahead.

Stock futures were higher Tuesday, after selling in Shanghai slowed overnight. The Shanghai market was off 1.7 percent, erasing its worse Tuesday losses, following Monday's sharp decline. The dollar gained, but commodities, like oil and gold continued to sell off.

That nearly 8.5 percent downdraft in Monday set the stage for weakness that was compounded by further selling in commodities. The S&P 500 dipped 12 Monday to 2,067, after slipping to 2,064, its 200-day moving average. The worst performing sectors were energy and materials, both down more than 1 percent.