Stocks are in limbo.
The Dow Jones Industrial Average fell for the first time in four days on Tuesday as the market digested its recent swings, with the S&P 500 and Nasdaq Composite also ticking lower.
Here's what four market pros are watching:
Jeff Saut, market strategist at Capital Wealth Planning, didn't let last week's volatility shake his bullish outlook:
"I think we're in the sixth inning. I think this market, the secular bull market that we're in, … has years left to run, and I think that you should be pretty much fully invested here. It was about three weeks ago … that I said, 'The market bottomed yesterday,' and that was Aug. 5, with a 90% downside day, meaning 90% of the total volume traded came in on the downside. Since then, you've had another 90% downside day on Aug.14, and you've had two almost 90% upside days. That … is the way bottoms are made, so we think the lows are in. The market might be a little bit ahead of itself on a very short-term trading basis, but, again, I think the market's going substantially higher."
Michael Tyler, Eastern Bank Wealth Management's chief investment officer, was more inclined to wait for the outcome of U.S.-China trade discussions:
"The interesting thing is that earnings are beginning to come in a little bit soft and we do have some signs that, if the next round of tariffs is implemented, a little in September and perhaps more in December depending on how the politics goes, that could really, meaningfully impact the consumer. Home Depot gave us a tiny touch of that this morning. And, if so, then we've got some real vulnerability, because the consumer has been the driving force for so long, and if that weakens, if consumers weaken, then we could have a fundamental problem. But for right now, rising valuations on low interest rates, even if earnings are a bit soft, I'd say Jeff is right: The market's probably got a little bit more, at least a little bit more, to go this year."
Former Minneapolis Fed President Narayana Kocherlakota warned of a debilitating "fear factor" weighing on global markets:
"I think the concern that you see in bond markets about the future is really tied to the lack of policy capacity that we have in central banks, that we're going to see these downside shocks and central banks and the fiscal authorities are not going to be able to respond effectively. And that's going to lead to another recession, perhaps of the magnitude we saw in — hopefully not, but could lead to a recession the kind of magnitude we saw in 2007 to 2009, with those same kind of persistent effects on output. And that's because it's the fear itself … of low capacity that breeds the conditions where, actually, central banks can't respond effectively. So, that's what worries me, and that's why I think we have these low nominal rates around the world. ... You look at German debt, for example, out to 10 years at negative nominal yields — this is all a fear factor, and we need to have better expectations of growth. I'm not sure where that's going to come from, though."
Kirk Hartman, president and global chief investment officer at Wells Fargo Asset Management, said playing today's market was all but a fool's errand:
"I think if you try to trade this market, it's an opportunity to lose money. I think you want to look through the next two months. I think you're going to see a lot more volatility until the trade dispute settles down, and I think what you want to do is you want to say, 'I want to own stocks towards the end of the year.' But I wouldn't be trading this market here."