Stocks are one bad headline away from 5-7% drop

The stock market is "one bad headline" away from a 5 percent to 7 percent drop, expert Jack Bouroudjian warned on Wednesday.

Investors are eagerly anticipating the Congressional testimony of former FBI Director James Comey on Thursday, and on Wednesday they appeared to hope it would be less damaging to President Donald Trump than previously feared.

U.S. stocks closed higher after the release of Comey's full opening remarks about Trump asking him to "drop" the probe into former national security advisor Michael Flynn.

However, Bouroudjian, chief economist and co-founder of UCX, told CNBC's "Closing Bell" that June has been historically been a bad month — and that is now coupled with "real serious headline risk."

The concern is how Comey's testimony and the investigation into Russia's alleged meddling in the U.S. election will effect Trump's agenda.

"If we don't get this pro-growth agenda passed through, we're going to have problems," he said.

He also believes the bond market is signaling there is a problem. The yield on the benchmark 10-year Treasury hit the low of the year on Tuesday.

Source: Bloomberg Pro Terminal

Junior Trader Stefan Panteleev

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