Several top Wall Street firms are raising red flags on the current state of the US stock market. Amid escalating tensions between the United States and the Middle East, top sectors are being affected. Oil prices are climbing, and there is ample uncertainty in the tech sector. Hence, analysts at Bank of America indicate that the current US stock market has eerie similarities to the economy during the 2008 financial crisis.
Bank of America’s Michael Hartnett flagged how oil doubled to $140 a barrel by August 2008 from $70 in July 2007, accompanied by the start of the “subprime tremors” that engulfed the likes of Northern Rock and Bear Stearns. The Iran war that erupted Feb. 28 has pushed oil prices more than 60% higher this year. With markets starting to look like 2008 prior to the financial crash, there are growing fears that a crash is coming within the next few months.
“Asset performance in 2026 is more ominously close to price action seen from mid’07 to mid’08,” Hartnett said in a note. Wall Street is “ominously trading ‘07-’08 analog,” he added.
Furthermore, the bigger risk to stocks from climbing oil prices and tightening financial conditions lies in earnings, rather than inflation, according to Hartnett. He recommended selling oil above $100 per barrel, 30-year Treasuries above 5%, and the dollar when the index spot is above 100, and the S&P 500 under 6,600. The 30-year yield was at 4.89% on Friday, while the dollar gauge was at 100.18, the highest since November, and the S&P 500 closed last at 6,673.
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Bank of America isn’t the only worried firm on The Street about the present US stock market. According to veteran stock strategist Ed Yardeni, the escalating war in Iran hurts global markets, and we are in “fast-moving times.” As a result, Yardeni has raised the probability of a market meltdown to 35% for the rest of the year, up from 20% previously. “The US economy and stock market are stuck between Iran and a hard place currently. So is the Fed,” Yardeni wrote in a note. “If the oil shock persists, the Fed’s dual mandate would be stuck between the increasing risk of higher inflation and rising unemployment.”