According to Jin10 data reports, Royal Bank of Canada strategists pointed out in a report that rising oil prices may lead to soaring inflation, and the S&P 500 index could decline by 20%. The strategists believe that the recent rebound in U.S. stocks and high valuations make them vulnerable.
The greater the extent and duration of the conflict in the Middle East, the more apparent the negative impact on U.S. stocks. In the worst-case scenario, the conflict could drive up energy prices, and the S&P 500 index might return to its April low. In a less severe scenario, the index could drop by 13%.
Analysis shows that if the inflation rate soars to 4%, earnings growth will be zero in 2024, the Federal Reserve will only cut interest rates twice, the 10-year Treasury yield will remain unchanged, and the S&P 500 index may fall to 4800 points by the end of the year, nearly 20% lower than the current level.