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After seven down days for the Dow, worst may still be ahead

The Dow Jones industrial average closed lower on Tuesday, logging the seventh straight losing session for the mega-cap index, and two experts say the worst could still be ahead for the Dow.

Erin Gibbs, equity chief investment officer at S&P Global, says the next two quarters may be difficult for the index; the Dow, trading at what Gibbs calls "rich" valuations, does not have as high a level of exposure to higher-growth sectors like consumer discretionary, financials and materials.

Those sectors, said Gibbs, are what she is expecting to drive for the second half of the year.


When looking at the average upside from the target price to the current prices, "we are only looking at a 6 percent increase over the next year, and that's pretty dismal," said Gibbs on Tuesday on CNBC's "Trading Nation."

Though Gibbs sees second-quarter earnings as having enjoyed a "massive" increase in analysts' expectations, she is more positive about where the S&P 500 is headed as compared to the Dow.

Gina Sanchez, chairwoman and CEO of Chantico Global, says many investors are "focused on the fact that we are seeing a reacceleration in GDP," which is largely pinned to expectations around earnings.

"We've seen some downward revisions and we've seen negative forward guidance, but on the whole, we finally see sales coming up out of negative territory," Sanchez said Tuesday on CNBC's "Trading Nation."

"Now the question is, can we meet the expectation already baked into the valuation? And that is where I think the challenge is," she said.

Sanchez also added that political uncertainty, coming up on the presidential election, could add to market uncertainty.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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