Commodities Could Fall
The continuing decline in oil prices, which has hurt energy companies and the banks and investors that lend to them, has some investors spooked.
"The commodity picture could get out of control to the downside," said John Manley, chief equity strategist at Wells Fargo Funds Management.
U.S. crude is now about $37 a barrel, down more than 65 percent since June 2014. Should the prices of oil and other commodities fail to firm, the risk is of spreading deflation, as declining earnings in those sectors spread to financial firms, suppliers and more, said Manley.
The Consumer Could Bail
Even with gasoline under $2 a gallon, consumers have resisted spending sprees and higher interest rates may entice them to tilt even more towards saving.
The price-to-sales ratio of the S&P has already topped previous peaks, says Jeff Weniger, senior portfolio strategist at BMO Private Bank in Chicago. Without sales, the whole growing economy-growing-earnings-improving-stock-prices structure could go south.
China Lands Hard, Other Countries Don't Do Much Better
"China is the 800-pound gorilla," said Allianz's Hooper.
In August, Chinese stocks fell and the U.S. market swooned in response. With the outlook for the world's second-largest economy still weak, investors worry that it could hurt demand for commodities, currency balances and more. Furthermore, weakness in China could ripple across the globe, hitting emerging markets and the United States as well.