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

Bank of America is flagging a combination of two market signals that historically have preceded periods of equity weakness: rising anxiety in the bond market and a selloff in financial stocks. Used together, these indicators suggest that stress in credit conditions and the banking sector may be building beneath the surface of broader indexes.

The logic is straightforward. Financial stocks tend to be sensitive to credit conditions and funding costs, so weakness in the group can hint at tightening liquidity or deteriorating confidence. When that weakness coincides with rising bond-market anxiety—often reflected in widening credit spreads or heightened volatility in fixed income—the two can reinforce each other, as banks sit at the center of the credit system.

For investors, the takeaway is not a prediction but a reminder that signals are probabilistic. What to watch: whether financial-sector weakness persists or reverses, whether bond-market stress eases, and whether broader credit conditions tighten further.