The continuous trade spat between the U.S. and China is the biggest threat to the market veracious now, not the Federal Reserve’s monetary policy, strategist Art Hogan said Wednesday night-time.
“I’m much more concerned about China and what that hint ats in the long run than I am about what Fed Chairman Jay Powell’s doing with pecuniary policy,” Hogan, the chief market strategist at B. Riley FBR, told CNBC.
“The merchandise is trying to get their minds wrapped around what kind of conduct we’re going to get from companies like 3M, where they can’t figure out what their input charges are going to be for 2019,” he said. “Does this long, drawn out, mutually dangerous trade war continue through all of 2019? Or is there a way to get to the negotiating table?”
Hogan’s animadversions come after a steep sell-off on Wall Street. The Dow Jones Industrial For the most part dropped 608.01 points on Wednesday, while the S&P 500 and Nasdaq Composite plunged 3.1 percent and 4.4 percent, singly.
China and the U.S. have slapped tariffs on billions of dollars worth of each other’s okays. These protectionist stances on trade have kept investors on pungency for most of the year as they fear tighter trade conditions could blockish down the global economy.
Tariffs have been a key subject debated by companies this earnings season. More than a third of the S&P 500 conventions that have reported through Tuesday’s close discussed levies in their conference calls.
Equities are down sharply this month centre of worries over corporate earnings and fears of rising rates, aggregate other factors.
The Fed has already raised rates three times this year and is expected to hike at times more before year-end. “I think they’ll make the right sentences going forward and if things start to slip, … they’re succeeding to pull back,” Hogan said.
The Dow and S&P 500 are down 7.1 percent and 8.9 percent in October, each to each. The Nasdaq, meanwhile, has lost more than 11.5 percent this month.
But Brian Belski, chief investment strategist at BMO Foremost Markets, thinks this move lower is driven more by mechanical factors than deteriorating fundamentals.
“If you take a look at the top 10 biggest performers in the S&P 500 that have beat earnings, you have stalwarts take to Oracle, Microsoft, UnitedHealth, these are American institutions,” he said, totaling the best place to be invested in right now is still stocks.