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Halloween is approaching, but ghosts and goblins aren’t October’s biggest nightmare on Wall Street.

Looming reinflation is.

“The underpriced risk right now is a reacceleration in inflation,” Kathryn Rooney Vera, chief markets strategist for StoneX, explained to Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid podcast (video above; listen below).

Citing recent spikes in oil prices amid rising Middle East tensions as one of the potential stumbling blocks, she added, “It’s the risk of an overstimulated economy.”

For the better part of September, investors had warmed to the notion that inflation was under control, setting the stage for rate cuts out of the Federal Reserve.

Inflation in August dropped to its lowest level since February 2021 as measured by the Consumer Price Index (CPI) report. For the month, inflation rose 0.2%. The result placed inflation for the last 12 months at 2.5%, down 0.4% from July.

The report set up the Federal Reserve to slash interest rates by a surprise 50 basis points on Sept. 18. It was the central bank's first rate cut in four years.

The consensus among Fed officials at the meeting was that they see two more 25 basis point cuts this year, followed by four more cuts next year and two more cuts in 2026.

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

For the September CPI report, due on Thursday, forecasters anticipate a meager 0.1% rise in prices for the month, which could go a long way in solidifying a 25 basis point cut at its early November meeting.

Since the Fed's rate cut, the S&P 500 (^GSPC) has logged a 2.6% gain.

Large-cap tech stocks — which tend to perform well in periods of lower interest rates — have rallied impressively. Netflix stock (NFLX) just touched a record high since the Fed decision, while market darling Nvidia (NVDA) has surged 15%.

As the markets go, the proverbial pendulum is likely to change its direction at some point, especially given the climb in oil prices and what it means to the inflation outlook.

Crude oil is up about 8% since Oct. 1 alone.

"While the development of the [Middle East] conflict remains uncertain, we see $10-$20/a barrel of upside to brent crude oil at the peak in the case of disruptions in Iranian production," warned Goldman Sachs analyst Yulia Zhestkova Grigsby in a client note.

If inflation picks back up, it could easily dent the now-consensus view that the market will get a steady dose of rate cuts into 2025. In turn, investors could dial back their expectations for equity returns.