The S&P 500 could fall another 23% in a worst-case scenario as the stock market prices in a one-third chance of recession, BofA says

Bank of America said in a note that the S&P 500 could plunge as much as 3000 in a worst-case scenario.

BofA's estimate represents 23% more downside potential because the broad index closed the week at 3,912.

According to the note, a one-third chance of a recession has been priced into the stock market so far.

The current bear market is the 27th since 1929 and has resulted in an average decline of 34%. The S&P 500 would bottom at 3,100, in line with BofA's worst-case scenario.

Experts say the Federal Reserve was too slow to tackle inflation and must now tighten monetary policy in order to snuff out the economic expansion.

That doesn't mean investors don't watch the game. According to BofA, the energy sector has performed better than the S&P 500 in the last year.

A surge in new supply is unlikely to put downward pressure on the price of oil. Capital expenditures among US oil producers have plummeted to a record low of 30%, according to BofA.

Consumer Discretionary is ranked at the bottom. Consumers shift from discretionary items to necessities poses further risk. The correlation between Energy and Consumer Discretionary earnings has historically been negative.