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 pandemic-era economic support—even if inflation subsides more sooner than expected.

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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 S&P 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 Stanley’s Michael Wilson said the Friday plunge, which saw the Dow tumble nearly 1,000 points for its worst day since October 2020, indicating the market is moving to a “much broader sell-off phase,” during which stocks in typically resilient industries—such as consumer staples—fall.

“The S&P appears ready to join the ongoing bear market,” Wilson said, cautioning that materials and energy stocks—two of the year’s top-performing sectors—have started to post “eye-popping” 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 40-year 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 large-cap pharmaceutical and biotechnology stocks—such as Merck and Eli Lilly—should persevere, helping to drive the S&P’s performance higher, thanks in part to relative low valuations and stable dividend yields.