Wilmington Trust's Meghan Shue believes the coronavirus outbreak is an enormous special case for Wall Street.
On the off chance that the infectious disease continues spreading, stocks are in a tough situation, she said.
“Coronavirus remains one of the biggest risks to the market at this point,” the firm’s head of investment strategy told CNBC’s “Trading Nation” on Monday. “I don’t think we know enough to know whether we’re out of the woods as of yet.”
Despite the fears, stocks commenced the week in the record an area for the S&P 500 and tech-heavy Nasdaq. The Dow rose 174 points, shutting Monday's trading within a hair of its record high.
Shue, who has $113 billion in assets under management, expects raised market volatility until several coronavirus cases top. Historically, she finds the market doesn't bottom until comparative outbreaks arrive at a top.
“On the international front, we’re watching coronavirus very carefully,” she said. “The U.S. economy is certainly more insulated from the impact of any international slowdown — not necessarily the S&P 500, but the economy as a whole.”
Shue sees two key interesting points: How much the virus spreads outside China and the effect on supply chains.
“From what we’ve been hearing, the larger technology companies [and] semiconductor companies have been able to manage this so far. But we’re getting new information daily,” said Shue, a CNBC contributor. “So, everything I’m saying is with a healthy dose of humility that we still don’t know everything there is to know about the global impact that this disease will have.”
Notwithstanding her concern, Shue is as yet overweight stocks. Her base case is the coronavirus outbreak will plateau this quarter and the global economy will rapidly bounce back.
“I would expect some further choppiness, some further volatility,” Shue said. “But over the next 12 months, we’re still optimistic on equities.”