Guggenheim CIO Says Oil Shock Can Drive 10% Selloff in US Stocks

US stocks could fall as much as 10% if oil prices remain elevated for several months, a scenario that risks derailing the retail-driven “buy-the-dip” dynamic that has supported markets in recent years, according to Guggenheim Partners Investment Management.

In a stress case where crude holds at around $100 a barrel for three months equities would face meaningful downside as higher fuel costs begin to weigh on household budgets and investor psychology, said Anne Walsh, the company’s chief investment officer. The bigger risk is a shift in behavior, not inflation.