New Delhi, July 21 -- Stocks are rebounding from last week's tech-driven sell-off, but investors should heed a warning from the bond market that stocks remain overpriced.

Yields on long-term government Treasuries have risen while the profits generated by S&P 500 companies relative to their prices haven't kept pace. The result is the so-called equity risk premium-the extra return investors expect for holding risky stocks over safe bonds-is getting compressed.

For most of 2026, the premium has been negative. When comparing the latest 4.95% earnings yield of the S&P 500 with the 5.0685% yield on the 30-year Treasury, the value of -0.1185 percentage points on Friday is higher than only 6.4% of the trading days since July 2007.

When compare...