Capital Economics expects S&P 500 to end lower by year end

While major banks including Credit Suisse, Barclays, BMO and Citi have softened their bullish expectations for 2019's stock market gains, analysts at Capital Economics have upped the ante, saying they expect the S&P 500 to end the year lower.

What to watch: The firm is expecting the U.S. economy to "slow sharply" this year with the S&P some 22% below its 2018 peak. Further, analysts say they do not rule out a mild U.S. recession this year.

"The data from the US have held up for now, but we expect the economy to slow further over the course of 2019 as the sugar-high from last year's fiscal stimulus wears off and the lagged effects of monetary tightening start to bite."

Go deeper: 2019 could be worst year for economy since '08