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Consumers may be the biggest risk to the stock market

Business growth is slowing, and the US government's economic stimulus is waning. That means America is pinni...

Posted: Jan 9, 2019 1:32 AM
Updated: Jan 9, 2019 1:32 AM

Business growth is slowing, and the US government's economic stimulus is waning. That means America is pinning its hopes on consumers to keep the economy growing.

If people become more cautious about their spending, that could weigh heavily on the economy and stock market, says Mark Howard, senior multi-asset specialist at BNP Paribas. He said he remains concerned about possible shocks to consumer confidence and behavior this year, calling consumer spending the biggest risk to markets.

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Howard will appear on CNN Business' Markets Now live show, hosted by CNN Business editor-at-large Richard Quest, on Wednesday at 12:45 pm ET.

Consumer spending makes up two-thirds of US gross domestic product. But consumers' confidence has fallen for two straight months, according to the Conference Board, although it remains at an historically high level. Consumer confidence in October was at its highest since 2000.

There's no reason to panic. But corporate earnings, which also fuel the economy, are starting to slow, too. Companies expect profit growth of about 7% this quarter, far lower than the growth of more than 20% in 2018. And the Institute for Supply Management's manufacturing and services sector reports this month showed business production is starting to slow — the manufacturing index fell by the largest amount since 2008.

The good news is the economy is not close to a recession. The stock market shuddered last month over the risk of a downturn, but the economy remains healthy. Stocks are posting a decent comeback this month.

The global economy will gradually slow as a whole, Howard believes. That's why the Fed is being more cautious about its monetary policy. Wary of raising interest rates too quickly, the Fed signaled two rate hikes in 2019 — half the number from 2018. The Fed is also gradually shrinking its balance sheet instead of dumping all economic stimulus at once.

Still, investors remain extremely fearful, according to CNN Business' Fear and Greed index. A bad consumer confidence reading or a spate of lousy earnings reports could rattle markets once again.

"Markets Now" streams live from the New York Stock Exchange every Wednesday at 12:45 p.m. ET. Hosted by CNN's business correspondents, the 15-minute program features incisive commentary from experts.

You can watch "Markets Now" at CNN.com/MarketsNow from your desk, phone or tablet. If you can't catch the show live, check out highlights online and through the Markets Now newsletter, delivered to your inbox every afternoon.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 608519

Reported Deaths: 9693
CountyCasesDeaths
Marion840461335
Lake45349684
Allen32803548
Hamilton29394315
St. Joseph27380381
Elkhart24404345
Vanderburgh19411249
Tippecanoe17970138
Johnson15069295
Porter14783169
Hendricks14401248
Madison10965221
Vigo10726181
Clark10677144
Monroe9383110
Delaware9116134
LaPorte9065163
Howard8236144
Kosciusko806983
Warrick672999
Hancock6697104
Bartholomew6484100
Floyd6428110
Wayne6136162
Grant5991115
Dubois555579
Boone551168
Morgan541295
Henry507864
Marshall503984
Cass483263
Dearborn479845
Noble473059
Jackson425047
Shelby417581
Lawrence391079
Clinton373043
Gibson370359
Harrison348144
DeKalb347164
Montgomery345754
Knox335639
Miami321444
Steuben313745
Whitley307326
Wabash303251
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Jefferson263338
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Greene239862
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Clay222532
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Spencer191321
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Fountain184027
Starke175443
Jay167623
Owen165737
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Orange159534
Carroll158015
Rush155118
Perry154229
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Franklin148333
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Parke13078
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Blackford111022
Pulaski97037
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Benton86610
Crawford7999
Martin73713
Warren6817
Switzerland6615
Union6287
Ohio4907
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Ohio Coronavirus Cases

Data is updated nightly.

Cases: 859841

Reported Deaths: 10680
CountyCasesDeaths
Franklin101171707
Cuyahoga855711125
Hamilton64017448
Montgomery43107418
Summit34836761
Lucas31350625
Butler30973232
Stark25786435
Warren19671140
Lorain19017223
Mahoning17321338
Lake16080154
Clermont15926111
Delaware1438878
Licking13204137
Trumbull12809316
Fairfield1279381
Greene12055137
Medina11591168
Clark10942265
Wood10348158
Allen9897126
Portage9296109
Miami916873
Richland9139118
Marion7459113
Tuscarawas7381182
Columbiana7327124
Pickaway726150
Wayne7034171
Muskingum703141
Erie6152129
Hancock552390
Ross548998
Scioto539164
Geauga508455
Darke470292
Ashtabula453073
Lawrence452654
Union451828
Sandusky436662
Mercer433589
Seneca430166
Huron428741
Auglaize422264
Shelby421222
Jefferson419269
Belmont416840
Washington388740
Athens38009
Putnam374975
Madison355129
Knox352622
Ashland344938
Fulton338443
Defiance330086
Crawford322374
Preble320637
Brown312921
Logan307332
Ottawa293943
Clinton290143
Williams278667
Highland275118
Jackson263845
Guernsey254125
Champaign252028
Fayette236530
Morrow23234
Perry231318
Holmes225474
Henry218749
Hardin213033
Coshocton205622
Van Wert202245
Gallia196726
Wyandot196051
Pike176217
Adams176115
Hocking172024
Carroll155616
Paulding144321
Noble120540
Meigs108624
Monroe100732
Harrison89121
Morgan83130
Vinton70213
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