Equity risk premium nears negative, warning of weaker US stock returns

11 articles · Updated · MarketWatch · May 6

The S&P 500 is near record highs even as the 10-year Treasury yield rises, and Roth Capital says the gauge could turn negative for the first time since late 2024 or early 2025.
Strategists say a sub-zero reading has historically preceded market stress, while higher yields driven by inflation fears linked to the Iran war are making stocks look less attractive than bonds.
Some investors remain calmer because earnings are strong and no recession is in sight, but concern is growing that enthusiasm for a narrow AI-led rally may not justify current valuations.

Is the AI-fueled stock market ignoring a historical warning sign that has predicted previous financial crises?

How can record-high stocks and a near-negative risk premium coexist, and which one will break first?