Market Insider

Week Ahead: Traders look for clarity from China, Fed

Dow enters correction territory

Stocks start the week on a nervous footing, with traders looking for signals from both China and the Fed to turn the tide.

While stocks could see a reflex pop after last week's nearly six percent decline in the S&P 500, traders see the potential for the first double digit decline in the S&P in four years and a possible rocky period ahead.

S&P/Capital IQ strategist Sam Stovall said the S&P 500, in fact, could see its first negative year since 2011, if it does fall into a true correction of 10 percent or more.

"Should the S&P slip into a long overdue correction mode, it will likely take longer than year end to get back to break even," said Stovall. In 2011, the S&P was just very slightly lower, down much less than 1 percent. Before that it was last lower in 2008. As of now, it is down 4.3 percent for the year.

Markets have been spooked by a slowing China and traders are watching for signs of further stimulus from China as well as clarity from the Fed on whether a September rate hike is still possible.