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These are 3 things worrying markets in week ahead

Stocks ended the week slightly higher despite fears about Chinese growth that rocked markets Tuesday and Wednesday. China‘s currency devaluation and the continued selloff in commodities markets also spurred talk of deflation and a global growth slowdown. But by Thursday, stock markets were calmer and traders were once more coming around to the view that China’s issues are not so bad that they will stop the Fed from raising interest rates as early as September.

The timing of the U.S. central bank’s first rate hike in nine years has been a constant source of debate in the markets, as traders await the final pieces of economic data the Fed will take to its September rate meeting.

Minutes of the Fed’s July meeting, to be released Wednesday afternoon, could give them some clarity. “They’re probably going to sound hawkish. I do think if the market continues to settle down in here and the currency doesn’t decline more, I think you could probably see those (September rate hike) odds creep up,” said Leo Grohowski, CIO of BNY Mellon Wealth Management.

“Whether it’s September or December, it’s going to matter on Sept. 17 if we’re not all prepared. There’s definitely going to be some volatility.”

There are also two Fed officials speaking, with Minneapolis Fed President Narayana Kocherlakota speaking Thursday in South Korea, and San Francisco Fed President John Williams also on Thursday in Indonesia.

Read More Money flees US stocks at highest level since 1993

“Now that we’re a month before what the consensus is for liftoff, every little sneeze you get from any of the Fed members is going to get some focus,” said Suzuki. He said the idea of Fed tightening could spook the market temporarily but ultimately the very slow pace of rate hikes should not be a problem for stocks.

But it could lead to a greater selloff than the recent several percent move in stocks. “In the face of this global soft patch, the uncertainty around the Fed and tightening adds to volatility over the next three to six months, or so. We wouldn’t be surprised to see a correction of 5 to 10 percent,” said Suzuki.

“Clearly, the major market drivers are global growth and commodities and the dollar and the most recent news everybody is talking about is China, and that’s been negative for all three of these … that was exacerbating the headwinds we’ve been dealing with for the last year,” he said.

Besides the Fed, there is a good helping of economic reports, including housing starts Tuesday and home sales Thursday. There’s also CPI consumer inflation data Wednesday and jobless claims and the Philadelphia Fed survey Thursday. There are also earnings reports from key retailers, like Wal-Mart, Home Depot, Lowe’s, Target and Gap.

Read MoreInflation alive and well in the service sector

“It’s hard to think data dependent when you have news like China coming back,” said Grohowski. “But the data is indicating a better U.S. economy and certainly that would alone justify at least the beginning of a (Fed) move. … The Fed can’t go into this with blinders. Whether it’s the China news, the global economy or the strength of the dollar, they’re going to be mindful of all of that.”

Grohowski said he expects that a first hike from the Fed in December is more likely. “I think we need to see the (Sept. 4) employment report. Right now, it’s a divided jury for September,” he said, noting the market began betting on higher odds for September after better data later in the week. Economists lifted their forecasts for tracking second-quarter GDP above 3 percent after business inventories but pared back third-quarter growth.

“Part of the reason we’re seeing some better economic performance is when oil first collapses, it shows up more immediately in the earnings. But it usually takes the better part of a year for it to show up in the real economy,” he said.

Read More Here’s what could take oil down to $ 30

Falling oil prices were big topic in the past week, as U.S. West Texas Intermediate crude futures fell more than 3.1 percent to a six-year low. Energy stocks, however, were the best performers of the big-cap S&P sectors in the past week, though they are 30 percent lower than this time last year.

The energy sector was up 3.2 percent; industrials were up 1.2 percent; and materials were 1 percent higher. The S&P 500 was up 0.7 percent for the week, to 2,091, while the Nasdaq was essentially flat, up less than 0.1 percent for the week.

“We could see a choppy market for the next few months but what’s going to rise from the rubble is these high-quality cyclical stocks … technology, industrials and energy companies,” Suzuki said.

Oil and agricultural commodities ended lower on the week but metals rebounded with gold up 1.7 percent.

The dollar index was down by 1 percent for the week, but the greenback was higher against the currencies of some emerging markets and commodities-driven economies like New Zealand.

Market Insider with Patti Domm

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