Stock market will tank in stagflation scenario, Bank of America warns
Markets haven’t hit bottom: Expert
Jim Lowell of Advisers Investments discusses the economy and volatility in the market.
The S&P 500 has gotten obliterated in a widespread sell-off this month, and the benchmark index is likely to drop even lower if the economy experiences a return to 1970s-style stagflation, according to Bank of America analysts.
In a recent analyst note, Bank of America strategist Savita Subramanian warned that a "worst case" stagflation scenario – the rare combination of economic stagnation and high inflation – could see the benchmark S&P 500 fall to 3,200, a drop of roughly 17% from current values. It would mark a stunning 33% drop from the beginning of the year.
S&P 500 FALLS INTO BEAR MARKET, JOINS NASDAQ
The S&P has already tumbled a little more than 20% this year, officially entering a bear market on Friday afternoon for the first time since March 2020, at the start of the COVID-19 pandemic. High inflation, rising interest rates and the risk of a recession have rattled investors in recent weeks.
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