Banco Santander reported earnings in line with expectations on Wednesday, supported by a solid performance in Brazil and Spain.

The euro zone’s largest bank by market value posted attributable net profit of 1.99 billion euros ($2.256 billion) for the three-month period ending Sept. 30. Analysts at data firm Refinitiv had been expecting third-quarter net profit to come in at around 1.98 billion euros.

In the third quarter of 2017, Santander reported net profit of 1.461 billion euros.

“We had a very strong quarter … And our goal going forward is keep the trend that we have seen in this quarter,” Jose Garcia Cantera, Chief Financial Officer at Santander, told CNBC’s “Squawk Box Europe” on Wednesday.

Here are the key takeaways:

  • Third-quarter net profit: 1.99 billion euros vs. 1.98 billion euros expected by analysts at Refinitiv.
  • Santander’s net profit rose roughly 36 percent compared to the same period a year earlier, when a number of one-off charges capped net profit to 1.461 billion euros.
  • The bank reported its core capital ratio stood at 11.11% at the end of September.

When asked whether he was concerned about weaker-than-anticipated euro zone GDP figures, Cantera replied: “There are some ups and downs but in the markets that we operate, basically Spain, Portugal and consumer lending in Europe, we see quite positive trends.”

“So, yes the economy is not really recovering strongly but it is keeping a relatively good pace and starting to spur good growth in credit.”

Growth in the euro zone slowed to its lowest level in over four years, according to data published Tuesday, as the region’s recovery appeared to run out of steam.

Euro zone GDP edged 0.2 percent higher for the three month period ending Sept 30. That was down from 0.4 percent at the end of June.

Like Spanish rival BBVA, Santander makes most of its profit overseas, a model that has helped the bank counter a double-dip recession at home in recent years.

In Brazil, where the lender makes over a quarter of its profits, net profit rose 24 percent compared to the same period a year earlier.

“We are very positive about the outlook in Brazil,” Cantera said.

Meanwhile, the Santander’s common equity Tier 1 capital — a key measure of balance sheet strength — came in at 11.11 percent at the end of September. That’s up from 10.80 percent in June.

Shares of the bank were up around 2.5 percent during early morning deals on Wednesday.

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L’Oreal’s Chief Executive Jean-Paul Agon told CNBC Wednesday that he sees no slowdown facing Chinese consumers, despite simmering trade tensions between Beijing and Washington.

“In terms of consumption, at least in our categories … we don’t see any slowdown in the country,” Agon told CNBC’s Joumanna Bercetche. “What we see is a great appetite of Chinese consumers. There is also more and more income that has to be spent.”

He said the company was seeing a “premiumization” in the Chinese market, meaning consumers “not only want to buy more products, but they want also higher quality products, better products, more expensive products, which is extremely positive.”

Agon added that L’Oreal was not seeing any direct inflation pressures resulting from the U.S.-China trade war. The two countries have been engaged in a tense sparring of tariffs, targeting billions worth of goods flowing into each other’s markets. A recent report said that the U.S. was planning a new round of tariffs targeting the remaining $257 billion worth of Chinese imports to prepare for the possible event that neither countries reach a trade agreement.

“We are seeing here and there some increases, but with the level of growth margin that we have, it’s not going to impact very materially our business.”

L’Oreal on Tuesday reported 6.47 billion euros ($7.34 billion) in revenue in the third quarter, which was up 6.2 percent from the previous year and 7.5 percent higher on a like-for-like basis, which strips out currency swings and the effect of acquisitions. Analysts polled by Inquiry Financial for Reuters had expected comparable sales to rise 5.79 percent.

Agon praised L’Oreal’s latest quarterly results as the company’s “best quarter … in 10 years,” adding that strong sales growth was mostly due to the “very strong growth in Asia.”

Like luxury goods makers, cosmetics companies like L’Oreal or Japan’s Shiseido have been hit by fears over a slowdown in China, which sparked a stock market sell-off. Shares in the French beauty group have fallen almost 8 percent since a peak in August.

But, following the firm’s earnings statement, shares shot up by nearly 6 percent on Wednesday during morning trade. The company said on Tuesday that appetite for its mass-market brands like L’Oreal Paris and especially luxury labels like Lancome remained robust in Asia, with the pace of revenue growth in the region even accelerating from a quarter earlier.

A particularly strong performance in the luxury division, which also houses Yves Saint Laurent make-up and brands like Clarisonic, helped L’Oreal to beat expectations in the July to September period.

Agon said that, as well as China, India and Korea were among other Asian markets boosting the firm’s performance.

“But China is very strong,” he added. “Sales in China are flying, especially in luxury, and we have seen this now for a long time, and it’s going on.”

Agon said this meant L’Oreal was “not only taking advantage of this strong market but also gaining market share which is very good for the future.”

The company said there were some improvements in western Europe during the third quarter in this division, which also comprises brands like Garnier shampoo, but said that the Brazilian market in particular was still tough.

On western Europe, Agon said: “For us, we had two good years (in the region) — last year and the year before — this year is a bit tougher, but we are still confident. We keep investing in western Europe, and we count on the gain in market share to keep growing.”

— Reuters contributed to this report.

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A day after suffering its biggest 24-hour decline in nearly three weeks, the bitcoin showed signs of stability on Tuesday.

A single bitcoin

BTCUSD, +0.18%

was last changing hands at $6,275.37, up 0.2% since Monday at 5 p.m. Eastern Time on the Kraken exchange.

Monday’s drop of more than 2% brought the total value of all cryptocurrencies back toward $200 billion, according to data from CoinMarketCap.

Read: The round numbers that show just how far bitcoin has come in 10 years

Yellen downbeat on bitcoin

Speaking at the Canadian FinTech Forum in Montreal on Monday, Janet Yellen, the former chairwoman of the Federal Reserve, said bitcoin lacks some key components to make it a sustainable means of payment. “It has long been thought that for something to be a useful currency it needs to be a stable source of value, and bitcoin is anything but,” said Yellen, according to Kitco.com.

“It’s not used for a lot of transactions, it’s not a stable source of value and it’s not an efficient means of processing payments,” she said, according to the report.

Yellen had been relatively tight-lipped on bitcoin when heading the Federal Reserve. Her previous remarks came in December 2017 when she said bitcoin is a highly speculative asset.

Janet Yellen just delivered a 5 minute rant against Bitcoin to Montreal financial industry VIPs. She went through all of Nouriel’s talking points.

The Official NPC guidelines to Bitcoin FUD, courtesy of the FED. Full video coming tonight.

Buy Bitcoin. Audit the Fed. pic.twitter.com/QH5wkl11W6

— Francis Pouliot (@francispouliot_) October 30, 2018

Read: Ron Paul: Tax-free crypto could help avoid a Fed-created recession

How are altcoins and futures performing?

Coins other than bitcoin, commonly referred to as altcoins, are crafting out mild gains Tuesday. Ether

ETHUSD, +0.28%

was trading up 0.3% at $193.74, Bitcoin Cash

BCHUSD, +0.54%

was higher by 0.5% at $413.10, Litecoin

LTCUSD, -0.08%

had gained 0.1% at $48.62 and XRP,

XRPUSD, +1.02%

was up 0.6% at 44 cents.

In futures trading, the Cboe Global Markets November contract

XBTX8, +0.00%

was unchanged at $6,245, while the CME Group November contract

US:BTCV8

had added 0.2% at $6,250.

Read: Bitcoin is 10 years old: Here’s what to expect in the cryptocurrency’s second decade

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New CEO, same ol’ result for General Electric Co. investors, as the industrial conglomerate’s stock started plunging toward a more-than nine-year low Tuesday, after the start of the post-earnings conference call.

GE reported third-quarter earnings and revenue that missed expectations, said it will slash its dividend to next to nothing to save cash and that it will reorganize its power business, and yet the stock initially rallied, as much as 2.3% in premarket trade.

FactSet, MarketWatch

But the honeymoon period for new Chief Executive Lawrence Culp appeared to end before it truly began, however, as the stock turned sharply lower after the post-earnings conference call with analysts began at 8 a.m. Eastern. That was a reminder of previous conference calls, in which the stock would start selling off after then-CEO John Flannery started talking.

Don’t miss: GE’s stock suffers worst day in 9 years after CEO John Flannery starts talking.

Also read: The Sniff Test: Ousted CEO John Flannery pays the price for taking out GE’s trash.

The stock

GE, -9.36%

plunged 9.8% in very active afternoon trade, shrugging off a brief early bounce into positive territory. That put the stock on track for the lowest close since March 30, 2009. Trading volume jumped to 306 million shares, compared with the full-day average of about 104.8 million shares, and enough to make GE the most actively traded stock on major U.S. exchanges.

GE shares have now tumbled 23.5% over the past three months, and 51% over the past year. In comparison, the SPDR Industrial Select Sector exchange-traded fund

XLI, +1.96%

has slipped 3.6% in the past 12 months and the S&P 500 index

SPX, +1.42%

has gained 4.0%.

On Tuesday’s call, Chief Financial Officer Jamie Miller said the issues hampering the company’s struggling power business “will persist longer and with deeper impact” than initially expected, leading GE to “significantly miss” full-year cash flow and earnings targets, according to a transcript provided by FactSet.

The company also disclosed in its 10-Q quarterly filing with the Securities and Exchange Commission that the SEC and the Department of Justice have expanded their investigations to include the large goodwill impairment charge for GE Power, announced earlier this month.

See also: Called to Account: Investors who paid attention to GE’s accounting saw trouble coming.

CFO Miller also said $240 million in warranty and maintenance reserves were recorded related to a GE Power H-frame gas turbine blade failure, that forced Exelon Corp. to shutdown a plant. She expects similar costs to be incurred over time, as planned outages are performed as the blades, currently in production, are replaced.

Miller added that at least $3 billion in contributions to GE Capital were planned for 2019, and that more support may be needed to achieve desired capital levels.

CFRA analyst Jim Corridore reiterated his hold rating on GE, but cut his stock price target to $12 from $14. He praised Culp for doing what was “brave and necessary,” by slashing the quarterly dividend to just 1 cent a share from 12 cents, but he doesn’t expect “material share price improvement until Mr. Culp gets some visible results.”

UBS‘s Steve Winoker kept his rating at neutral and his stock price target at $13, saying he believes cutting the dividend, which will GE about $3.9 billion a year, is a “positive move as they work to reduce leverage.”

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CAMBRIDGE, Mass. (Project Syndicate) — The Standard and Poor’s 500 index

SPX, +1.37%

  of share prices has fluctuated wildly during 2018 but has returned to nearly the same level that it was at the beginning of the year. The absence of a net fall for the year reflects the combination of a rise in corporate profits and a 12% decline in the price-earnings ratio. And the fall in the price-earnings ratio is an indication of the likely evolution of share prices in the next few years.

The normalization of the 10-year interest rate could cause the P/E ratio to return to its historical benchmark. A decline of that magnitude would cause household wealth to shrink by about $8 trillion.

The price/earnings (P/E) ratio is now 40% higher than its historic average. Its rise reflects the very low interest rates that have prevailed since the Federal Reserve cut the federal funds interest rate to near zero in 2008. As long-term interest rates rise, however, share prices will be less attractive to investors and will decline.

A key sign of this is that the yield on 10-year Treasury bonds

TMUBMUSD10Y, +0.98%

  has doubled in the past two years. But, at a little over 3%, it is still barely above the rate of inflation, which averaged 2.9% over the past 12 months. Three forces will cause the long-term interest rate to continue to rise.

• First, the Fed is raising the short-term federal funds rate and projects that it will increase from a little over 2% to about 3.5% by the end of 2020.

• Second, the very large projected budget deficits will cause long-term rates to rise in order to induce investors to absorb the increased volume of government debt. According to the Congressional Budget Office, the volume of publicly held debt will rise from about $15 trillion now to nearly $30 trillion by the end of the decade.

• Third, the very low and falling rate of unemployment will cause inflation to accelerate. Investors will demand higher yields on bonds to compensate for the resulting loss of purchasing power.

It would not be surprising if the rate on 10-year Treasury bonds rises to 5% or more over the next few years. With an inflation rate of 3%, the real yield will be back to a normal historic level of over 2%.

This normalization of the 10-year interest rate could cause the P/E ratio to return to its historical benchmark. A decline of that magnitude, from its current level of 40% above the historic average, would cause household wealth to shrink by about $8 trillion.

The historic relationship between household wealth and consumer spending implies that the annual level of household consumption would decline by about 1.5% of gross domestic product. That fall in household demand, and the induced decline in business investment, would push the U.S. economy into recession.

Most recessions in the United States have been relatively short and shallow, with durations of less than a year between the beginning of the downturn and the date when the recovery begins. The recession that began in 2007 was much longer and deeper because of the collapse of financial institutions. The faster and more robust recoveries that characterized most previous recessions reflected aggressive countercyclical monetary policy by the Fed, which cut the short-term interest rate very sharply.

But if a recession begins as soon as 2020, the Fed will not be in a position to reduce the federal funds rate significantly. Indeed, the Fed now projects the federal funds rate at the end of 2020 to be less than 3.5%. In that case, monetary policy would be unable to combat an economic downturn.

The alternative is to rely on fiscal stimulus, achieved by cutting taxes or increasing spending. But with annual budget deficits of $1 trillion and government debt heading toward 100% of GDP, a stimulus package would be politically difficult to enact.

As a result, the next economic downturn is likely to be deeper and longer than would otherwise be the case. If the government at that time chooses to use fiscal policy, the future debt-to-GDP ratio will rise further above 100% of GDP, forcing long-term interest rates even higher. It is not an attractive outlook.

This article was published with permission of Project SyndicateFalling Share Prices and the Outlook for the U.S. Economy

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Apple announced two new iPads during a press event in Brooklyn on Tuesday, including a new 11-inch iPad Pro and a 12.9-inch model. They’re both completely redesigned and no longer have Home buttons.

But they’re going to be a tough sell to people who just “need an iPad” and can save a bunch of money with Apple’s regular $329 iPad, which was refreshed just a couple of months ago.

The new models sure look nice, though, and the new Pros represent a major leap forward for the iPad.

Sharp corners replace the more rounded edges of earlier iPads. The display seems just as good as my year-old iPad Pro, but I love that it runs from the top to bottom, which makes it easy to just pick up the iPad without worrying if you’re holding it upside down or not.

I prefer the 11-inch model of the two, which feels about the same as last year’s 10.5-inch model in my hand, but has a nice extra bit of screen to look at. The 12.9-inch iPad Pro has a noticeably smaller footprint than last year’s model but still feels too big to me. Maybe that just takes some getting used to.

There’s a new iPad Pencil stylus with support for gestures that let you switch between the different digital brush styles. You won’t lose this one as easily as last year, since it clips to the side of the iPad with magnets. It even wirelessly charges when attached to the iPad, an improvement over the silly Lightning plug from last year.

For work, you can attach a keyboard. It felt just like the keyboard Apple launched with last year’s iPad Pro 10.5 but can adjust the screen to two different viewing angles, which is a nice touch.

You’ll pay more for the iPad Pencil and a keyboard, though, which cost $129 and $179, respectively. That’s a lot to swallow considering the 11-inch iPad starts at $799 with 64GB of storage and the 12.9-inch model starts at $999. Most people might want to consider just getting a new MacBook Air, which starts at $1,199.

I own last year’s 10.5-inch iPad Pro, and it already feels outdated, which is a bit of a bummer. After some more time with a review unit I’ll let you know whether or not it’s worth making an upgrade.

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Last quarter, Pfizer Chief Ian Read was upbeat on the Trump administration’s plan to lower drug prices, even after a Trump tweet that led to his company deferring planned price increases.

Now, after a set of proposals counter to the industry’s interests leading into the midterm elections, Read’s support sounds as if it may be waning. One tenet in particular — a plan announced last week to tie prices of certain drugs paid for by Medicare to an international average — has Read and other pharma leaders speaking out.

“I don’t believe that the proposed rule in reference pricing to price-controlled markets as a way of setting prices in the U.S. is good for innovation, patients or our industrial base,” Read told CNBC in a telephone interview Tuesday.

Allergan CEO Brent Saunders was similarly against the plan in an interview on CNBC’s “Squawk on the Street” Tuesday, calling it a “dangerous proposition” and a “slippery slope.”

The administration announced its Blueprint to Lower Drug Prices in May, and was generally met with support from the drug industry.

In particular, pharmaceutical companies like Pfizer lauded the administration’s plan to target drug rebates. Those are the discounts drugmakers give to middlemen such as pharmacy benefit managers, often in exchange for more favorable insurance coverage for their medicines. Drug companies argue the rebating system helps drive the price of medicines artificially higher.

When Pfizer decided to defer its planned price hikes earlier this year, it said the current prices would remain until the end of the year, or until the blueprint goes into effect. Under Read’s definition, the latter doesn’t appear likely before year-end.

“We don’t think the blueprint could be implemented other than seeing a radical change in the pricing model by insuring that rebates get to the patient,” Read told CNBC. “I feel that they’ve been less rapid than I’d have liked on this discount issue.”

Read said he hopes the administration will revise its plan to tie drug prices covered by Medicare Part B to an international average that’s much lower than what the U.S. currently pays. Medicare is the government insurer for the elderly and disabled, and Part B drugs are those administered in the hospital or doctor’s office, rather than being dispensed at a pharmacy.

Read did say he is “quite positive about increasing competition in the Part B space,” another aspect of the administration’s recent proposal.

Industry experts have noted the timing of the Trump administration’s most recent moves seem orchestrated around the midterm elections. Drug pricing is a popular campaign issue on both sides of the aisle.

Read, who hands the Pfizer CEO role to Chief Operating Officer Albert Bourla in January, takes a longer-term view.

“I’ve been in the industry 41 years,” he said, “and pricing has always been an issue.”

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Investors are awaiting to see if Facebook’s warnings about a slow down in revenue growth rates will impact the company’s latest earnings.

Facebook is expected to report its third-quarter earnings after bell on Tuesday. Here’s what analysts expect:

  • Estimated earnings per share (EPS): $1.47, per Refinitv
  • Estimated revenue: $13.78 billion, per Refinitiv
  • Estimated daily active users (DAUs): 1.51 billion, according to FactSet and StreetAccount
  • Estimated monthly active users (MAUs): 2.29 billion, according to FactSet and StreetAccount
  • Estimated average revenue per user: $6.44, per Refinitv

Third-quarter EPS estimates are down 7.5 percent year-over-year. Last quarter, Facebook missed revenue and global daily active user estimates. The company advised it expected its revenue growth rates to decline as much as high single-digit percentages during the third and fourth quarter of this year because the company has invested more in its Stories product, which has lower ad rates, and other things like security and compliance with the EU’s GDPR data privacy law.

The company was also hit with a security breach last quarter that left more than 30 million user accounts vulnerable to unauthorized control. The issue, which was first reported in late September, exposed names, contact details and other personal information including gender, relationship status and recent locations.

Facebook shares have been down more than 19 percent year to date.

This is a breaking news story. Please check back for updates.

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Your children’s smartphone games may be selling them stuff behind your back.

Some 95% of downloaded apps for kids ages 5 and under use at least one type of advertising tactic, according to a University of Michigan C.S. Mott Children’s Hospital study released Tuesday. These applications, many of which tout themselves as educational games, have pop-up video ads, characters persuading children to make in-app purchases and banner ads, researchers found. The study, published in the Journal of Developmental & Behavioral Pediatrics, looked at more than 135 apps.

See: Smartphones can affect children’s mental health — how to get them sleeping again

These marketing strategies were used in 100% of free apps analyzed in the study and 88% of apps that cost money, and they occurred at similar rates in both. Video ads were in a third of all analyzed apps and more than half of free apps.

In-app purchases, a way of making users (in this case, children) pay for an upgrade while they’re using the app, were present in one-third of all apps, and 41% of free apps. “Our findings show that the early childhood app market is a wild west, with a lot of apps appearing more focused on making money than the child’s play experience,” said senior author Jenny Radesky, a developmental behavioral expert and pediatrician at Mott.

Some of the games have hidden advertisements, while others interrupt play with a video that the children must watch to continue playing or earn credit in the game.

Children don’t comprehend marketing the way adults do, making them more vulnerable to advertising. “It’s very difficult for them to recognize advertising but it’s even harder to understand when it is embedded in game play,” said Josh Golin, executive director for Campaign for a Commercial-Free Childhood, a national advocacy coalition of healthcare professionals, educators and parents.

The organization sent a public letter to the Federal Trade Commission asking for an investigation of apps for young children. In it, the CCFC, along with the Center for Digital Democracy, argued these apps’ marketing practices — intended for parents but shown to young children — are unfair and deceptive to both. “Until we have a regulated app market for children, [parents] should ignore these things,” Golin said.

Many children aren’t capable of detecting “persuasive intent” in advertising until they’re at least 7 years old, according to a 2017 study “The Effect of Advertising on Children and Adolescents” published by the American Academy of Pediatrics. Even if preschool-aged children can identify marketing, they may not be able to effectively defend themselves against it, the researchers noted.

“Children’s readiness to learn from their social world renders them vulnerable until they develop skepticism,” the researchers wrote. “However, even as adults, we may be capable of skepticism but still fail to use our critical-thinking skills at all times.”

Also see: This is what happens when you take phones away from teenagers

Advertising regulations do not directly touch on smartphone use or games, Golin said, even though children’s use of media platforms has grown dramatically in the last few decades.

Advertisers spend more than $12 billion a year to reach the youth market, and children view 40,000 commercials each year. The FTC enacted the Children’s Online Privacy Protection Act in 2000, focused on collection of personal information of children under 13 on the internet, but it does not regulate how advertisers can market to children online as it does in television.

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Don’t be fooled by the stock market’s early, manic Monday moves, some market participants caution.

A jump by the Dow Jones Industrial Average

DJIA, -0.99%

the S&P 500 index

SPX, -0.66%

and the Nasdaq Composite Index

COMP, -1.63%

in early trade has investors hoping that a withering rout that has played out since early October may be coming to an end. Stocks ended sharply negative, with traders blaming fresh news on U.S.-China trade talks, and hard-to-shake worries about global growth.

For the month, the Dow is on track to shed 6% of its value, the S&P 500 is off 4.7% and the Nasdaq, which has lost 10% from a recent peak, putting it in correction territory, is down 10.3% so far this month, according to FactSet data.

The cautious optimism may come with good reason, markets in Europe rose sharply Monday. And International Business Machines Corp.’s

IBM, -4.13%

 planned acquisition of Red Hat Inc.

RHT, +45.38%

in a deal valued at $33 billion, may suggest that Wall Street still views the current atmosphere as one conducive to deal making, despite the selloff in the market that has been led by technology and internet names and threatens to leave the three main indexes with their worst October since 2008.

Still, a number of pundits say that prudence is warranted.

Related: Why finding the low in this stock selloff ‘is going to feel awful, like it always does’

“I don’t think we’re quite settled down yet,” veteran trader Art Cashin, UBS director of floor operations said on CNBC late-morning Monday.

Read: Opinion : 5 reasons to buy stocks now—and 5 reasons to run from the market

Jesse Colombo, economic analyst and registered investment adviser at Houston-based Clarity Financial had this to say: “People are getting excited about today’s market bounce. Stop…just stop. This bounce means absolutely nothing. Last week’s important technical breakdown is still intact:

People are getting excited about today’s market bounce. Stop…just stop. This bounce means absolutely nothing. Last week’s important technical breakdown is still intact (see the chart below). Today’s bounce is noise, not signal. Learn more: https://t.co/pzWtrkMrXl $SPY $SPX pic.twitter.com/2btnBOsIS9

— Jesse Colombo (@TheBubbleBubble) October 29, 2018

Check out the Colombo’s chart below, if it isn’t clear in the tweet. The idea is that damage to stock market technicals is severe and equities still have considerably more work to do before bulls can declare a reinstatement of the uptrend (see the chart below):


Major drivers of market sentiment like the popular technology and internet-related constituents of FANG, including Facebook Inc.

FB, -2.26%

Amazon.com Inc.

AMZN, -6.33%

Neflix Inc.

NFLX, -5.00%

and Google-parent Alphabet Inc.

GOOGL, -4.52%

were still under pressure.

Shares of Amazon.com were on pace to enter bear-market territory, down by at least 20% from a recent peak, underscoring the notion that the uptrend has come to a screeching halt, especially if shares of the most influential companies over the past 18 months are turning decidedly lower.

On top of that, the average stock in the S&P 500 has fallen by at least 20%.

Those factors, and many others, have given investors cause to believe that the worst is far from over for equities, even if Monday has demonstrated some signs of buoyancy.

“As for the very near term, it’s hard to see a sustained rally for the next few weeks,” wrote Stephen Auth, chief investment officer at Federated, in an Oct. 25 research note.

Mark Newton, president and founder of research firm Newton Advisors, said he wasn’t particularly sold on the morning’s early bounce either:

“Still difficult to have much confidence in this being a market to buy into that aggressively. Trends from 10/17 remain lower, and while there is now a minor amount of stabilization since last Wednesday, we haven’t seen much fear pick up yet and volume is heavier on the downside than upside- Early gains in both S&P and Nasdaq failed to get back up above area that matter,” he wrote in a Monday research note.

Newton believes that the market may need a flush out, or capitulation of market bulls, to truly achieve a bottom, where the stock market can constructively head higher.

The bright side, if there is a near-term bright side, is that many market participants say that the market is overly worried about the economy falling into recession and that has led to so-called oversold conditions in equity benchmarks. However, it would seem that those conditions can persist for as long as market fears linger.

Tony Dwyer, equity analyst at Canaccord Genuity, said there is an initial “whoosh” lower, “followed by an oversold bounce, then a retest of the low, which should then kick-start the next leg higher,” MarketWatch’s William Watts reports. “Our indicators suggest the low of the initial ‘whoosh’ should be this week, because when the indicators reach this level of oversold and get more extreme, it happens immediately.”

Monday offers no dearth of reason to worry, including those of a geopolitical nature.

German Chancellor Angela Merkel said during a news conference Monday she wouldn’t run for any political office again after her term as the country’s leader ends in 2021. That is a political decision that could eventually ripple through global markets, even if European stocks were treading higher now, because Europe’s trade bloc is contending with Britain’s exit from the European Union and Italy’s budget clash, while the European Central Bank is attempting to end easy-money policies.

Read: Merkel’s planned exit means more uncertainty over European Union and the euro

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