BofA Sees Rising Risk of a Stock-Market Peak, Advises Taking Some Profits
Summary
- Bank of America said signs of peak risk in the U.S. stock market are increasing and recommended some profit-taking.
- BofA said about 70%% of its bear-market warning indicators have been triggered, and cited elevated valuations across the U.S. stock market and rising speculative trading as risk factors.
- BofA said it is maintaining its year-end S&P 500 target of 7,100 while stressing the need for a cautious approach to the broader market.
Forecast Trend Report by Period
Bank of America said warning signs of a potential peak in U.S. equities are increasing and advised investors to take some profits. The call comes as markets weigh whether the recent rally has left stocks overheated.
Walter Bloomberg reported on June 8 that BofA said in a note about 70% of its bear-market warning indicators had been triggered.
That level has historically resembled patterns seen near major market tops, the bank wrote.
BofA also said valuations across the U.S. stock market have become elevated and speculative trading is increasing.
The bank cited the recent concentration of gains in a handful of large-cap stocks as another risk factor.
Still, BofA said stock-specific opportunities remain.
The bank maintained its year-end S&P 500 target of 7,100, while stressing that a cautious approach is warranted for the broader market.
Markets have been supported by expanding investment in artificial intelligence and improving corporate earnings. At the same time, elevated valuations and overheated sentiment are raising the odds of a short-term pullback.
