In a worst-case scenario, they see the S&P 500 returning to its April lows if the attacks drive up energy prices. And in a less-severe case, the index may fall about 13%, the strategists said.
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 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.
