as the market struggles to brush off some of its worst losses in more than a year a growing number of experts are warning more stocks could tumble into bear market territory as the federal reserve unwinds its pandemicera economic support—even if inflation subsides more quickly than expected while major stock market indexes plunged as much as 2 tuesday analyst tom essaye of the sevens report warned clients he remains cautious on the sp 500 as stocks struggle to stabilize pointing to relentless selling on friday as a potential predecessor to a sharp downturn of as much as 5 in a monday note morgan stanleys michael wilson said the friday plunge which saw the dow tumble nearly 1000 points for its worst day since october 2020 indicates the market is moving to a much broader selloff phase during which stocks in typically resilient industries—such as consumer staples—fall “the sp appears ready to join the ongoing bear market wilson said cautioning that materials and energy stocks—two of the years topperforming sectors—have started to post eyepopping losses while defensive stocks such as in consumer staples have gotten expensive relative to earnings in another potentially bearish sign for stocks the analyst said inflation has likely peaked after reaching a 40year high last month thereby taking some pressure off the federal reserve as it hikes interest rates but also meaning lower sales and earnings growth for companies benefiting from the price hikes for many companies it could be painful if inflation declines swiftly and sharply particularly in the materials and energy sectors which have benefited from rising commodity prices wilson says adding be careful what you wish for despite tighter fed policy and slowed earnings growth wilson believes largecap pharmaceutical and biotechnology stocks—such as merck and eli lilly—should persevere helping to drive the sps performance higher thanks in part to relative low valuations and stable dividend yields inflation is peaking but thats not bullish because it means profit margins and earnings have peaked too wilson said monday the market has been so picked over at this point its not clear where the next rotation lies in our experience when that happens it usually means the sp is about to fall sharply with almost all stocks falling in unison the reopening economy fiscal stimulus and historically low interest rates helped fuel one of the strongest starts to a bull market ever during the pandemic but stocks have struggled this year as the fed raises rates and unwinds economic support to ease decadeshigh inflation meanwhilerussias invasion of ukraine has only tacked on to the uncertainty after rising 27 in 2021 the sp has fallen 12 this year while the nasdaq has hit bearmarket territory plummeting 20 “when the market is grappling with too many things at one time it’s generally a headwind meaning the more managers have to discount too many issues the more they have to lighten up on risk” rtm capital advisors’ mark ritchie ii told real vision on monday adding that hes particularly worried of a secular bear market in which stocks struggle for years since 1955 the sp typically performs well in the nine months after the fed first hikes interest rates before performance begins to moderate ally analyst brian overby said in a tuesday note thinking longer term remember that over the last four decades the sp produced positive returns through six tightening periods he adds dow plunges nearly 1000 points in brutal and ugly endofweek selloff spurred by hawkish fed forbes this recession indicator is flashing warning signs as fed war and oil threaten economic recovery forbes