Investors aren’t paying enough attention to this big risk lying in wait for stocks, says John Hancock strategist

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Need to Know: John Hancock spotlights a major risk lying in wait for stocks

The S&P 500 SPX, -0.79% looks ready to get back up and fight Wednesday, a day after recession worries and fresh Italian political upheaval stopped a three-session winning streak. Investors are no doubt hoping for interest-rate cut reassurance from the Federal Reserve meeting minutes due later. On the speaking circuit, Minneapolis Fed’s Neil Kashkari pounded the table for a rate cut in September, while San Francisco Fed President Mary Daly said recession is not on the horizon.

How high? Wall Street analysts are expecting 10.5% earnings growth in 2020 for the S&P, he says, adding that we’d “need to see a significant change in the macro backdrop to achieve that type of earnings growth.” Europe stocks SXXP, +1.30% are higher, led by Italian equities I945, +2.02%, which are taking off as investors wait for news of fresh elections after Prime Minister Giuseppe Conte’s exit. Asia XJO, -0.94% struggled, with Australian stocks XJO, -0.94% leading a decline with a 1% drop.The buzz Among retailers shares of Lowe’s LOW, +2.97% and Target TGT, -0.45% are climbing after forecast-beating results. Walmart WMT, -1.55% is suing Tesla TSLA, -0.

Existing-home sales figures are coming after the stock market opens, and, later in the day, those Fed minutes.

 

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