The stock market could be due for a nasty selloff, judging by these two signals

Bank of America has flagged two warning signs that it says could precede a pronounced market decline. The first is a jump in what the bank describes as bond-market anxiety — elevated stress or turbulence in fixed-income markets. The second is a concurrent selloff in financial-sector equities.

According to the bank’s analysis, the combination of heightened dislocation in bond markets and weakening prices of financial stocks raises the prospect of a broader shock to markets. Historically, strains in bond markets can transmit through to other asset classes, and financial firms are often sensitive to interest-rate moves and credit conditions, making their stock performance a bellwether for market health.

Bank of America’s note frames these two developments as linked signals rather than isolated events, suggesting that together they warrant closer attention from investors and market participants. The bank did not, in the material provided, specify timing, magnitudes, or particular triggers that would crystallize into a full marketwide selloff.

Market watchers will likely monitor both bond-market measures and financial-sector equity performance to assess whether the current signals intensify or abate. Any persistence or escalation of these trends could reinforce the bank’s concern about elevated downside risk for markets.