A continued decline in global growth and struggling European stocks could present the biggest risks to the global markets, according to two market watchers.
"Global growth is going to continue to decelerate roughly about 2 percent over the next 12 to 18 months," Chad Morganlander of Stifel Nicolaus said Tuesday on CNBC's Power Lunch. He added that this adversely impacts global earnings in the United States, especially for S&P 500 companies.
"So we would be concerned about that, especially with valuations at forward looking [price-to-earnings] multiples of 17 times. We believe we're a bit stretched," Morganlander said.
The S&P 500 and Dow plunged in the immediate market fallout after the United Kingdom voted to leave the European Union, alongside an even sharper decline in many European markets. But rather than spotting bargains, Morganlander said potential investors should focus on credit growth, particularly in emerging markets.
"If you start to see a rapid deterioration there, that would be a bear sign for the overall global economy and the global markets," he added.
Oppenheimer technical analyst Ari Wald said continues risk from European financials pose the biggest concern now.
Looking a chart of the STOXX Europe 600 bank index going back to 1995, Wald said the trends indicate further declines are ahead, so this is one area of the market investors should continue to sell.
"We can see this equity market topping out at the same level it topped out at in 2000 and 2007, so still in secular decline, now breaking a seven-year uptrend as well," he said Tuesday.