Consumers may be the biggest risk to the stock market

Business growth is slowing, and the US government's economic stimulus is waning. That means America is pinni...

Posted: Jan 9, 2019 1:32 AM
Updated: Jan 9, 2019 1:32 AM

Business growth is slowing, and the US government's economic stimulus is waning. That means America is pinning its hopes on consumers to keep the economy growing.

If people become more cautious about their spending, that could weigh heavily on the economy and stock market, says Mark Howard, senior multi-asset specialist at BNP Paribas. He said he remains concerned about possible shocks to consumer confidence and behavior this year, calling consumer spending the biggest risk to markets.

Banking, finance and investments

Business, economy and trade

Financial markets and investing

Securities trading

Stock markets

Economy and economic indicators

Consumer behavior

Consumer confidence

Economic indicators

Economic conditions

Economic decline

Recession

Economic policy

Interest rates

Monetary policy

Government organizations - US

The Fed

US federal departments and agencies

US government independent agencies

Company activities and management

Company earnings

Financial performance and reports

Financial results

Howard will appear on CNN Business' Markets Now live show, hosted by CNN Business editor-at-large Richard Quest, on Wednesday at 12:45 pm ET.

Consumer spending makes up two-thirds of US gross domestic product. But consumers' confidence has fallen for two straight months, according to the Conference Board, although it remains at an historically high level. Consumer confidence in October was at its highest since 2000.

There's no reason to panic. But corporate earnings, which also fuel the economy, are starting to slow, too. Companies expect profit growth of about 7% this quarter, far lower than the growth of more than 20% in 2018. And the Institute for Supply Management's manufacturing and services sector reports this month showed business production is starting to slow — the manufacturing index fell by the largest amount since 2008.

The good news is the economy is not close to a recession. The stock market shuddered last month over the risk of a downturn, but the economy remains healthy. Stocks are posting a decent comeback this month.

The global economy will gradually slow as a whole, Howard believes. That's why the Fed is being more cautious about its monetary policy. Wary of raising interest rates too quickly, the Fed signaled two rate hikes in 2019 — half the number from 2018. The Fed is also gradually shrinking its balance sheet instead of dumping all economic stimulus at once.

Still, investors remain extremely fearful, according to CNN Business' Fear and Greed index. A bad consumer confidence reading or a spate of lousy earnings reports could rattle markets once again.

"Markets Now" streams live from the New York Stock Exchange every Wednesday at 12:45 p.m. ET. Hosted by CNN's business correspondents, the 15-minute program features incisive commentary from experts.

You can watch "Markets Now" at CNN.com/MarketsNow from your desk, phone or tablet. If you can't catch the show live, check out highlights online and through the Markets Now newsletter, delivered to your inbox every afternoon.

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Confirmed Cases: 33558

Reported Deaths: 2110
CountyConfirmedDeaths
Marion9616571
Lake3538185
Cass15897
Allen145168
St. Joseph124834
Elkhart116328
Hendricks116171
Hamilton115693
Johnson1093108
Madison58559
Porter51627
Bartholomew50034
Clark49241
LaPorte42423
Howard39526
Tippecanoe3903
Jackson3791
Delaware37736
Shelby36822
Hancock32728
Floyd31839
Boone30935
Morgan27824
Vanderburgh2652
Montgomery23517
White2318
Decatur22431
Clinton2231
Noble21121
Grant20621
Harrison19221
Dubois1923
Henry16910
Greene16824
Monroe16612
Warrick16628
Dearborn16621
Vigo1648
Lawrence15423
Miami1411
Putnam1367
Jennings1304
Orange12522
Scott1193
Kosciusko1111
Franklin1098
Ripley1086
Carroll922
Marshall901
Daviess8516
Steuben812
Newton7710
Wayne776
Fayette767
Wabash762
LaGrange712
Jasper651
Washington521
Jay500
Fulton481
Clay471
Rush462
Randolph463
Pulaski460
Jefferson431
Whitley393
Starke363
Sullivan341
Owen341
Brown331
DeKalb331
Perry310
Benton300
Knox290
Wells280
Huntington272
Tipton251
Crawford240
Blackford242
Fountain202
Switzerland200
Spencer191
Parke170
Posey160
Gibson142
Adams131
Ohio130
Warren121
Martin110
Vermillion100
Union80
Pike60
Unassigned0164

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Confirmed Cases: 117455

Reported Deaths: 5270
CountyConfirmedDeaths
Cook762663570
Lake8063287
DuPage7543362
Kane6188170
Will5442269
Winnebago215654
McHenry151471
St. Clair109179
Kankakee87144
Kendall76919
Rock Island64624
Champaign6177
Madison56558
Boone42817
DeKalb3924
Sangamon34629
Jackson26810
Randolph2674
McLean21713
Peoria2128
Ogle2023
Stephenson1992
Macon19519
Clinton18117
Union1519
LaSalle14713
Whiteside13512
Iroquois1314
Coles12514
Unassigned1250
Out of IL1191
Warren1130
Jefferson10116
Knox970
Grundy952
Monroe9411
McDonough878
Lee791
Cass710
Tazewell714
Henry680
Williamson642
Pulaski510
Marion500
Jasper457
Macoupin452
Adams441
Perry420
Montgomery391
Vermilion391
Morgan351
Christian334
Jo Daviess320
Livingston322
Douglas260
Menard210
Fayette203
Ford201
Jersey201
Woodford192
Mason180
Washington180
Mercer170
Hancock160
Shelby161
Bureau151
Carroll142
Bond121
Franklin120
Piatt120
Schuyler120
Clark110
Crawford110
Fulton110
Moultrie110
Brown100
Cumberland100
Logan100
Wayne91
Alexander80
Henderson80
Effingham71
Johnson70
Massac70
Saline70
Greene50
Marshall50
De Witt40
Lawrence40
Richland30
Stark30
Clay20
Edwards20
Gallatin20
Hamilton20
Wabash20
White20
Calhoun10
Edgar10
Hardin10
Pike10
Pope10
Putnam10
Terre Haute
Clear
72° wxIcon
Hi: 75° Lo: 53°
Feels Like: 72°
Robinson
Scattered Clouds
74° wxIcon
Hi: 74° Lo: 53°
Feels Like: 74°
Indianapolis
Broken Clouds
70° wxIcon
Hi: 71° Lo: 50°
Feels Like: 70°
Rockville
Broken Clouds
69° wxIcon
Hi: 73° Lo: 51°
Feels Like: 69°
Casey
Scattered Clouds
73° wxIcon
Hi: 73° Lo: 53°
Feels Like: 73°
Brazil
Clear
72° wxIcon
Hi: 73° Lo: 52°
Feels Like: 72°
Marshall
Clear
72° wxIcon
Hi: 74° Lo: 52°
Feels Like: 72°
A wonderful Saturday with sunshine expected!
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events