As stocks climb into record territory, analysts warn there are still pitfalls for investors, and any of them could halt the rally.
Stocks are breaking through all-time highs at the start of what is typically the best two months of the year.
That should give the market fuel for a positive market move into the end of the year, with November and December the top two months for the S&P since 1950. But analysts warn of potential pitfalls that investors should watch out for along the way, and any of them could sap the market's gains.on Monday roared past its July high of 3,028, amid improving views of the economy and optimism that the U.S. and China will sort out some trade differences in the near future.
In addition to the cut, the Fed on Wednesday is expected to signal its intentions about future rate cuts. The market is pricing in a rate cut for this week, then a pause, followed by a rate cut for next year. Emanuel said a sell-off could take the S&P back down to the 2,875 level. The benchmark traded as high as 3044.12 on Monday.
Even so, disappointment about Fed commentary this week could spark a short term sell-off. Emanuel has a target of 3,000 on the S&P for year end, but he says his number could be too low. He expects the S&P 500 to head to 3,250 next year. He said the pressure on margins is causing analysts to cut fourth quarter estimates. "A week ago Wall Street had 1.5% earnings growth in their Q4 2019 models on 3.2% revenue growth," he noted. "Now, they show 0.7% earnings growth —less than half last week's estimate— even as revenue growth expectations are essentially the same at 3.0%."
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