Jiahuang Capital Markets: In a high inflation scenario, US stocks may drop by 20%.

The Capital Markets strategists at Jiahua stated in a report that outlined three possible pullback scenarios that if rising oil prices lead to soaring inflation, the S&P 500 Index faces a risk of dropping by 20%. Strategists like Lori Calvasina noted that given the recent significant rebound and seemingly high valuations, the U.S. stock market is relatively fragile. They mentioned that the larger and longer the range of the Middle Eastern conflict, the greater the negative impact on the U.S. stock market. In the worst-case scenario, if attack incidents drive up energy prices, the S&P 500 Index is expected to return to its April lows. They indicated that in a slightly better scenario, the index might drop by about 13%. "This conflict may trigger more concerns about the consumer situation, the overall economy, and the Federal Reserve's path; this narrative shift seems likely to pose problems for stock prices," the strategists wrote in the report.