Amid a pervasive confluence of economic challenges, investors are waiting to see if profits are holding up or if companies will cut forecasts. One reason for caution is the dichotomy between two major Wall Street forces. Analysts are betting Corporate America is resilient enough to pass on higher costs to consumers at a time when many strategists aren’t really convinced that’s the case.

“The stock market has NOT already priced-in any possible upcoming decline in earnings estimates from this year (or next),” wrote Matt Maley, chief market strategist at Miller Tabak. “Even if earnings estimates stay stable and especially if they decline, the stock market is going to have to fall further before we see an important bottom for this bear market.”

In fact, Maley noted that stocks are trading at valuation levels that are seen as highs — not lows. The current price-to-sales metric is at the same level of market tops in 2020, 2018 and at the tech bubble in 2000, he added.

Read: BlackRock Warns Against Dip Buying as High-Volatility Era Dawns

Price pressures, a wave of monetary tightening and a slowing global economy continue to keep investors on the sidelines even after an $18 trillion first-half wipeout in global equities. A US inflation reading later this week is expected to get closer to 9%, buttressing the Federal Reserve’s case for a jumbo July rate increase.

A combination of steep Fed hikes and economic growth fears have lifted the greenback to the highest levels since March 2020. The dollar surge will be a “massive headwind” for profits at many large US firms and another reason to expect a dimming earnings outlook, wrote Michael Wilson, chief US equity strategist at Morgan Stanley.

Wilson says the S&P 500 bear market will continue, and sees fair value at 3,400-3,500 in case of a soft landing and 3,000 in a recession — a 23% downside from Friday’s close.

“Markets are moving at lightening speed to discount a rollover in inflation rates, a reversal of Fed tightening and an outright recession,” wrote Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “A stagflationary stall is as probable as an outright recession.”

Read: Fed’s George Warns Raising Rates Too Fast Risks ‘Oversteering’

What to watch this week:

• Earnings due from JPMorgan, Morgan Stanley, Citigroup, Wells Fargo
• BOE Governor Andrew Bailey discusses the economic landscape, Tuesday
• Amazon.com Inc. kicks off its Prime Day event, Tuesday
• South Korea, New Zealand rate decisions, Wednesday
• US CPI data, Wednesday
• Federal Reserve Beige Book, Wednesday
• US PPI, jobless claims, Thursday
• China GDP, Friday
• US business inventories, industrial production, University of Michigan consumer sentiment, Empire manufacturing, retail sales, Friday
• G-20 finance ministers, central bankers meet in Bali, from Friday
• Atlanta Fed President Raphael Bostic speaks, Friday

Stocks

• The S&P 500 fell 1.1% as of 11:04 a.m. New York time
• The Nasdaq 100 fell 2%
• The Dow Jones Industrial Average fell 0.5%
• The Stoxx Europe 600 fell 0.6%
• The MSCI World index fell 1.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.9%
• The euro fell 1% to $1.0083
• The British pound fell 1.2% to $1.1883
• The Japanese yen fell 1% to 137.45 per dollar

Bonds

• The yield on 10-year Treasuries declined 10 basis points to 2.98%
• Germany’s 10-year yield declined 12 basis points to 1.23%
• Britain’s 10-year yield declined nine basis points to 2.14%

Commodities

• West Texas Intermediate crude fell 2.5% to $102.22 a barrel
• Gold futures fell 0.2% to $1,738.70 an ounce