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Stay Diversified in Range Bound But Rocky Market

The S&P is down 6% so far in 2016, but a tug of war between declining corporate earnings and a strengthening consumer will keep markets static for the foreseeable future.

The S&P is down 6% so far in 2016, but a tug of war between declining corporate earnings and a strengthening consumer will keep markets static for the foreseeable future, said Doug Cote, chief market strategist at Voya Financial (VOYA). 'We think we will be range-bound from here,' said Cote. 'This certainly is not a bear market at this point.' The stock market is certainly not being helped by the dismal performance of the major bank stocks. The Financial Select Sector SPDR ETF (XLF), which holds mega-banks like JP Morgan (JPM), Citigroup (C) and Bank of America (BAC), is down almost 12% so far in 2016. Cote said the low interest rate environment, along with problems in the energy sector are weighing on U.S. banks. Furthermore, he said concerns about the stability of European banks has made its way to U.S. shores, yet is overdone at this point. 'The U.S. banks are very well capitalized, but there was a spillover effect coming from across the pond and with a strong consumer it helps banks ultimately,' said Cote. Cote said lower energy prices have also been a destabilizing force for stocks.

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