Market is vulnerable to more punishing sell-offs on trade war disappointments, Invesco's Kristina Hooper warns

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Wall Street faces further disappointment on trade, Invesco warns

Invesco's Kristina Hooper expects selling pressure to return to the market.

She suggests Tuesday's market rebound off the Dow's 600-plus point drop on Monday isn't a sign stocks are out of the woods.

Hooper believes it's almost inevitable investors will get another batch of disappointing news on U.S.-China trade war front.

"Since the beginning, I haven't found any compelling reason why China would want to make major concessions to the U.S.," the firm's chief global market strategist told CNBC's "Futures Now " on Tuesday. "I always expected that either the U.S. would accept minor concessions around making smaller the trade deficit or that there wouldn't be a resolution to this."

According to Hooper, May's market pullbacks off trade setbacks were warranted because Wall Street painted itself into a corner by wrongly pricing in a meaningful resolution to the dispute. She's warning investors that more adjustments are needed. The size and length, she said, is headline dependent.

And, if it wasn't for Federal Reserve policy, the trade-related sell-offs would be deeper, she said.

"The game changer for 2019, of course, is the Fed. It changed its policy stance in a very significant, abrupt way. And so, that provides a cushion under stocks," she said. "This whole sell-off would have been a lot worse had we not had that Fed changing its stance."

Despite calling for additional trouble, she's sticking with a 2,850 to 2,950 year-end S&P 500 target, a fraction to a 4% gain from current levels.

"I would expect volatility both up and down," Hooper said. "But not a meaningful rally if we don't see some kind of resolution."