The benchmark S&P 500 index, a closely watched gauge of the stock market's performance, has risen just 1% this quarter, coming to a near standstill after a gain of 4% in the second quarter and a sizzling 13% in the first three months.
The Trump trade war's drag on
"Companies are saying they have to make decisions on business plans. You can't continue to have companies putting that decision off because it will start affecting the longer curve of growth," said JJ Kinahan, chief market strategist at
Without a definitive view on where and how businesses will invest, companies and investors will likely remain in a "holding state" with no significant rally on the horizon, Kinahan added.
Trump's announcement last month of new tariffs on a host of Chinese goods directly impacting consumers added ballast to a
Corporate earnings growth has also evaporated, following 2018's one-off boost from Trump's tax cut. That's added more worry to an already uncertain economic environment.
"We're doing this on lower expectations and at some point earnings drive markets," Kinahan said. "If the expectation is that earnings will grow at ever slower rates, at some point the market will have to start reflecting that."
While the S&P 500 is still hovering near record highs analysts don't expect growth to accelerate until there is a clearer path to ending the trade war.
"We expected a slowdown, but not this extreme," said