After rebounding 6.5 percent from Aug. 25-Aug. 28, the S&P 500 index has dropped 3.7 percent so far this week, and the carnage may not be over, says Bob Janjuah, senior independent client adviser at Nomura Securities.
The index traded at 1,915 Tuesday afternoon.
"When we were up at [2,100], I thought we would see 1,700 at some point late in the third quarter, or early in the fourth quarter," he told CNBC
The index hit a record of 2,134.72 May 20. The 1,700 level represents a drop of 11 percent from here.
"We made some progress toward that target, I think there's a bit more to go," Janjuah said. The index hit a low of 1,867.01 Aug. 24.
Sluggish growth in China and much of the rest of the world will weigh on stocks, he said. "What I think the investor needs to understand is that globally there's not enough growth, there's way too much capacity. And we've hidden that gap with this thing called liquidity. Actually liquidity is debt."
Star hedge fund manager Doug Kass, president of Seabreeze Partners Management, isn't too hot on stocks either. He says investors have been overly optimistic. “We were in a bull market in complacency,” Kass told The New York Times
. “I think that the spike in volatility that we’ve seen in the last 10 days is the precursor to further spikes.”
The CBOE Volatility Index (VIX) has soared 69 percent during that period to 32.26.
“The fundamentals around the world are still wobbly, and valuations are still elevated,” Kass said. As for valuations, the trailing price-earnings ratio for the S&P 500 index totaled 20.69 Friday, up from 19.19 a year ago, according to Birinyi Associates.
Meanwhile, weak data continue to pour out of the economies of the eurozone, Japan and China, not to mention other emerging markets. In China, the government calculated second-quarter economic growth at 7 percent, but private economists say it's closer to 3 to 5 percent.
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