The first full week of what has traditionally been the worst month of the year for Wall Street stocks got underway on Tuesday, with more poor economic data from China and further crude oil supply cuts by Saudi Arabia and Russia.
Read: A stormy September for U.S. stocks may lie ahead. What investors need to know about Wall Street’s worst month. On Tuesday, U.S. stocks slipped on what Reynolds regards as the risk of “stagflation-lite” to “some extent, but not fully yet.” All three major U.S. stock indexes DJIA SPX COMP were lower in New York afternoon trading, after the downbeat international data and a report showing U.S. factory orders fell 2.1% for July.
However, “the rise in energy prices should flow into consumer prices over time, which is not good news for markets and would require a bigger correction than what we’ve seen,” something on the order of 20% for the S&P 500 from this summer’s peak, he said.