Investment managers are warning that markets probably have further to fall as China’s growth slows, oil prices plunge and central bankers lack tools to prop up economies.

The Standard & Poor’s 500 Index will drop another 10 percent to 1,650 and oil could fall as low as $20 a barrel as investors flee for safety, according to Scott Minerd, chief investment officer of Guggenheim Partners. Jeffrey Rottinghaus, whose T. Rowe Price mutual fund beat 99 percent of rivals over the past year, said stock prices could fall another 10 percent as the U.S. economy slips into a mild recession.

"I expect a protracted decline in the S&P 500," Jeffrey Gundlach, co-founder of DoubleLine Capital, said in an e-mailed response to questions. "Investors should sell the bounce-back rally which could come at any time."

The S&P 500 dropped less than 1 percent at 9:45 a.m. and is down 9.4 percent for the year. The Dow Jones Industrial Average was also little changed after falling 9.8 percent in 2016. Oil rose 6.7 percent to $28.34.

“Excessive risk exposure is adding to the selling pressure,” Gundlach said. “Today’s plunge into the lows looked like a margin call liquidation type of event.”

Rottinghaus, manager of the $203 million T. Rowe Price U.S. Large-Cap Core Fund, said "industrials and commodities have been in a recession for at least six months" in the U.S. “What we are trying to figure out is how much that bleeds into the consumer side of the economy," he said in an interview.

Waiting For A Catalyst

Russ Koesterich, global chief investment strategist at BlackRock Inc., said there needs to be a fundamental catalyst to signal a market bottom, whether it comes from corporate earnings, economic data or an improvement in China.

"You need to have some stabilization of fundamentals to give people conviction this has gone too far," Koesterich, whose firm is the world’s largest money manager, said in an interview. "Certainly you are getting closer to capitulation. The magnitude of the drop suggests that."

Hedge fund manager Ray Dalio said global markets face risks to the downside as economies near the end of a long-term debt cycle. The Federal Reserve’s next move will be toward quantitative easing, rather than monetary tightening, the founder of Bridgewater Associates said in an interview with CNBC from the World Economic Forum in Davos. That won’t be easy, because rates are already so low, he said.

Risks To Downside

“When you hit zero, you can’t lower interest rates anymore,” Dalio said, according to a transcript of the interview. “That end of the long-term debt cycle is the issue that means that the risks are asymmetric on the downside because risks are comparatively high at the same time there’s not an ability to ease.”

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