David Royer

In a recent note to clients, DataTrek noted that while the U.S. equity selloff since July 31 has been damaging for large caps, it has been far worse for small caps, as both the Russell 2000 and S&P SmallCap 600 both tagged 1-year lows this week.

After big gains for the U.S. stock market this year, equity valuations could come under pressure from high interest rates, based on historical relationships, JPMorgan strategists said on Tuesday.

Global debt provides another negative for an already stretched equity multiple, JPMorgan says. Inflation ticked up again in August, putting more pressure on equities.

The S&P 500 is priced for perfection and could plunge 25% if problems crop up, Mike Wilson says. Morgan Stanley’s stock chief says the outlook for company earnings and the economy is pretty grim. Investors have piled into Big Tech to ride out the storm, but they may still feel pain, Wilson says.

Wall Street’s “fear gauge” passed a key level Tuesday with investors rattled by soaring bond yields. Stocks have plummeted with traders expecting interest rates to stay high well into 2024. That’s driven the VIX, which tracks S&P 500 volatility, to a four-month high.

“The upside versus downside in stocks is not that great,” according to Marko Kolanovic.