US Stocks Risk 20% Drop in High Inflation Scenario, RBC Says

The S&P 500 Index risks sinking 20% if inflation spikes on the back of higher oil prices, according to a report by RBC Capital Markets LLC strategists that laid out three possible pullbacks.

The strategists, led by Lori Calvasina, said US equities are vulnerable given the recent rally and valuations look stretched. The broader the Middle East conflict becomes and the longer it lasts, the more negative it will be for US stocks, they said.