The benchmark S&P 500 (^GSPC -0.25%) is hovering near a record high, but the risk of a sell-off might be rising due to the ongoing geopolitical tensions in the Middle East, the stubbornly high inflation rate, and the growing chance of an interest rate hike before the end of 2026. The S&P 500 currently has a Shiller cyclically adjusted price-to-earnings (CAPE) ratio of 41.6, its highest valuation since the dot-com bubble in 2000. That makes the index especially vulnerable to downside, and if it were to enter a bear market by experiencing a 20% decline, many stocks with elevated valuations would likely also suffer sharp corrections. The S&P 500 last traded in bear territory during 2022 and 2023, which sent Tesla (TSLA -1.71%) stock plummeting by 75% to just $100. The electric vehicle (EV) giant recovered to set a new record high of $489 last year, but it's currently on the back foot once again. Here's why I predict it will fall below $100 if the S&P enters another bear market. Tesla stock is trading at a sky-high valuation Tesla used to be the undisputed global leader of the EV industry, but over the last couple of years, the company has struggled to compete with the onslaught of low-cost manufacturers from China. Brands like BYD, Geely, and Zeekr sell EVs at lower starting prices than Tesla in key markets like Europe, while offering comparable features. As a result, Tesla's EV sales declined in both 2024 and 2025. Fortunately, they are recovering in 2026, with the company's first-half deliveries growing by 16% year over year to 838,149 vehicles. However, that growth is relative to a horrible 2025, and it comes with a lower average selling price and a shrinking gross margin, suggesting Tesla is slashing prices for its EVs to attract