It's been a wild few weeks for markets.
A sell-off last week dragged stocks sharply lower with the emergence of the omicron variant of the coronavirus, a more hawkish Federal Reserve and a mixed jobs report keeping investors cautious.
This week has seen a 180 with the S&P 500 on Tuesday rallying 2% for its best gain since March. The VIX volatility index on Friday spiked above 30 for its highest reading since the beginning of the year.
Mark the calendar, though. Ally Invest's chief markets and money strategist, Lindsey Bell, said two upcoming economic events could trigger even more volatility during an already unpredictable stretch.
"I'm one of those voices that's saying there is still risk and volatility likely to come ahead, especially as we wait for next week's Fed meeting and we get [consumer price index inflation data] this Friday," Bell told CNBC's "Trading Nation" on Tuesday. "There's a lot of things, a lot of headlines that could come across that could add to continued volatility all at a time when volumes tend to be lower."
That volatility has surfaced memories of a December three years earlier, said Bell. The S&P 500 in December 2018 fell more than 9% as investors feared a central bank ready to tighten monetary policy, a slowing economy, and an intensifying trade war between the U.S. and China. It marked the worst December since 1931.
"It's very similar to what you're seeing today, the Fed sounding the alarm that inflation isn't so transitory as they thought, it could be here to stay, and they are willing to take action as the job market heals," said Bell.
The November jobs report, released last Friday, gave enough good news despite the weak headline number to support a Fed move, Bell said. Wage growth, a falling unemployment rate and increasing participation painted a rosier picture than the overall job growth number indicated.
"That signals that the Fed could continue on a path to be more hawkish, to end their bond-buying programs sooner than anticipated and then ultimately raise rates sooner than the market had initially expected," she said.
Either way, for Bell it's more crucial how the Fed hikes rates rather than when. She said a strategic central bank that maintains a measured pace with its tightening policy could still create a supportive environment for equities.
"If they're more quick to pull the trigger and continue to raise rates at a faster pace, then the market could suffer," she said.
The Federal Open Market Committee will convene for a two-day meeting next Tuesday with a rate decision and news conference set for next Wednesday afternoon.
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