Wall Street just limped through its roughest stretch in months, and every investor is asking the same nervous question: Is the worst over in the stock market, or is the selloff just getting started?

MarketWatch put the question to three strategists and portfolio managers whose jobs are to predict which way the market might go. None would call for a further drawdown outright, but they all agreed on the reasons it might happen: inflation, higher interest rates and a volatility story that's just getting started.

U.S. stocks on Friday closed out a brutal month that erased a chunk of the summer's gains in technology names. The Nasdaq Composite COMP slumped 3.2% in July to log its worst month since March, while the S&P 500 SPX was off 0.1% and the Dow Jones Industrial Average DJIA booked a modest 0.3% monthly gain, according to FactSet data.

Technology stocks came under heavy pressure this past month, as investors grew increasingly anxious over the staggering cost of the artificial-intelligence buildout and whether hyperscalers will ever earn a return on their eye-watering capital spending.

Adding to the anxiety was a violent jolt in energy markets, where oil prices (CL00) (BRN00) swung wildly as escalating U.S.-Iran military strikes raised fears that the conflict could further spread across the Middle East.

Then, the Federal Reserve's latest decision to hold interest rates steady offered little relief. Longer-duration Treasury yields such as the 10-year and 30-year rates climbed sharply this week, as investors bet on more aggressive monetary tightening from the central bank later this year.

Here's a look at what three of Wall Street's sharpest minds had to say, and where they split.

Inflation is back as the driving force of the broader market

In the view of Callie Cox, chief market strategist at Ritholtz Wealth Management, investors have to brace for more market swings, with inflation back as the driving force of the broader market from now on.

"That's not me saying that it's going to happen, but conditions are tedious enough, and we're staring at so many high-water marks that it feels like a market recovery could be tougher if the market does find itself moving higher," she told MarketWatch via phone on Friday.

"Understanding that inflation right now is the biggest risk to stock portfolios. At the same time, growth doesn't look resilient heading into the end of the year," Cox added.

Recent economic data, including the latest consumer-price index and personal-consumption expenditures reports, showed that inflation had begun to cool, at least in June. But a renewed rise in oil prices in July threatened to reverse some of that progress.

To be sure, Cox said the current drivers of inflation will not trigger another 2022-like price crisis, which was fueled by pandemic-related supply-chain disruptions and massive fiscal stimulus.

But after almost four straight years of strong gains in the bull market, interest-rate uncertainty and inflation may be high enough to "continue destabilizing" stock prices, Cox noted.

The AI-fueled inflation surge and higher rates could be tech's next headaches

It's not just rising energy prices but also the increase in AI demand that could contribute to inflation. Rising prices for inputs like memory chips, which are heavily used in data centers and AI infrastructure, increase costs that companies may eventually pass on to their customers, said Brian Kersmanc, portfolio manager at GQG Partners.

"Inflation is as much a sentiment-driven thing as anything else, because if somebody believes there is going to be inflation, they react and consume the way that they believe there is going to be rising price pressures," Kersmanc told MarketWatch in a phone interview. "So the longer inflation sticks around and is persistent, it does tend to drive that forward."

As a result, for rate-sensitive sectors like technology - and especially chip names SOX - companies with extremely elevated valuations are more vulnerable to rising interest rates because a larger portion of their expected revenues and profits comes from further in the future, making those future cash flows less valuable when discounted at higher rates.

However, inflation could also create a second-order positive effect on the tech sector. Higher rates don't just compress stock valuations - they could also reduce the amount companies are willing or able to spend on capital expenditures, Kersmanc noted.

"I would argue that [inflation is] probably better for the hyperscalers at this point, because everybody's concerned about how much capital they are spending," he said.

The stock market rotates as war looms overhead

The tepid performance on the broader market in July actually belies churning beneath the surface.

Despite the selloff in Big Tech and semiconductors, the rest of the stock market held up in the month , with the equal-weighted version of the S&P 500 XX:SP500EW up 1.3%, compared with the 0.1% decline in the market-cap-weighted index during the same period, according to FactSet data.

"With the overhang of the war, all the market ever does is rotate," said Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors.

Seven of the S&P 500's 11 sectors finished the month of July with gains, with weakness only seen in the information-technology XX:SP500.45, industrials XX:SP500.20, materials XX:SP500.15 and utilities sectors XX:SP500.55, according to FactSet.

"Normally, you get just a broad-based rally in July because earnings are usually good," Hatfield said in a phone interview. "But this time, with the overhang of the war, we think hedge funds might be continuing to blow up and their liquidation may not be completely over, so that's going to create volatility."