This is what could finally end the 8-year bull market

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The second-strongest bull market in history may be about to hit a wall as inflation ticks up, a feat that in the past caused stocks to underperform, according to Jefferies.

"Higher inflation has not been a good thing in the past for equity markets, as performance generally weakens as inflation rises. A faster pace of rising inflation could bring about more rate hikes, which also weakens returns," Ward McCarthy, chief financial economist at Jefferies, wrote in a research note.

In a study released Thursday, the investment firm analyzed the market's performance going back to 1948 versus measures of inflation and found an inverse correlation between the two variables.

"As inflation ticks higher, small, mid, and large [cap companies] tend to weaken and vice versa. Inflation heading higher means that interest rates should also rise, and thus valuations for equities falls," McCarthy wrote.

In a relatively short period of time, Jefferies says inflation has climbed higher and could continue on its uptrend through the rest of the year.

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