Stocks fell more than 2 percent Friday to end the week sharply lower, with the Dow Jones industrial average off 2.2 percent for its worst week since January 8. The S&P 500 had its worst week since February 5, dragged down by a nearly 4 percent decline in consumer staples. Only the energy sector held gains, as oil rose 3.2 percent for the week to settle at $45.88 a barrel Friday.
Markets were back to work after a dull August of trading, and there was a $40 billion plus burst of corporate bond issuance that strategists expect to see continue.
But in the stock market, the push and pull debate continues about whether there is a seasonal pull back coming in the near term especially now that the market fears interest rate hikes.
Jack Ablin, CIO of BMO Private Bank, said he expects stocks to remain choppy, as the market sorts through the idea of a potential Fed hike
"I think this is what withdrawal looks like for an addict," said Ablin. "I would still view it as an opportunity to buy instead of getting out of the market altogether."
"It's hard to know," whether the Fed would actually hike in September, said Ablin. "They tend to look at, even though the stock market could be upset, they tend to look at credit markets. Even though yields are up, spreads are OK."
"We just think that now is the time," said Julian Emanuel, equity and derivative strategist at UBS. Emanuel made his comments Thursday, before the market sell off Friday. "We're not calling for the end of the seven-and-a-half year bull market, but what we think is it's likely that you're going to have over the next couple of months is a spike in volatility, along the lines of what you've seen on numerous occasions over the last year and a half. It will ultimately be a buying opportunity."
Strategists say the market could become more concerned about the presidential election in the next several weeks.
"The market is not reflecting the idea that the price of uncertainty should be higher," Emanuel said.