PNC Financial has a message for investors: Buckle up.
According to co-chief investment strategist Jeffrey Mills, 2019 will be another exercise in managing emotional responses to a scary market.
“Volatility is going to be here to stay,” he said on CNBC’s “Futures Now.” “The path for the bulls is becoming a little bit more narrow.”
Mills made his comments on Tuesday as the market was weaving in and out of correction territory — an erratic pattern he believes will persist as Wall Street struggles to navigate policy uncertainty.
“Even when you think about the positive days that we’ve seen in this corrective phase, they haven’t been all that strong from a technical standpoint,” he said. “Breadth hasn’t been that good.”
Market volatility has been a major theme his forecasts this year. Last summer, he gave his bullish case for stocks on “Futures Now,” but warned investors they should keep their “seat belts fastened” because the markets could get messy.
By Sept. 21, the S&P 500 reached an all-time high. About two weeks later, the index was tumbling into a correction. The index is now more than 10 percent off its record high.
“We’re just still operating within the confines of an ongoing correction,” he said.
Mills, who believes the bull market is intact, cited skittishness surrounding tariffs between the United States and China and the Federal Reserve’s interest rate hike policy for the wild market swings.
“The slowing growth in China as well as higher interest rates [in U.S.] are the two biggest risks that I would look to in 2019,” he said. “The level of interest rates is going to be incredibly important to the markets. I think the market will be well-served if the Fed does in fact pause next year.”
As for the rest of 2018, Mills isn’t ruling out a year-end rally that would push the S&P to the mid-single digit percent range — especially if there’s good news on the China trade front and next week’s Fed decision soothes investors’ angst over rising rates next year.
“You end up hoping for this environment where the economy plods along, inflation kind of remains where it is and then the Fed stops tightening,” Mills said. “That could happen.”