Home News Bank of America Thinks The S&P 500 Will Drop 6% Until Year-End

Bank of America Thinks The S&P 500 Will Drop 6% Until Year-End

Bank of America Thinks The S&P 500 Will Drop 6% Until Year-End

Stocks are near record highs, even if today’s session is mixed. But that’s not enough to get Bank of America (BAC) excited anymore.

The Wall Street bank’s year-end target for the S&P 500, the broadest gauge of the US stock market, is 4,250 points, some 6% below where it is now. The target for end-2022 is 4,600, some 100 points from where the index is now.

“S&P 500 [earnings per share] is up 50% from the Covid trough, and the S&P 500 has doubled,” the bank’s analysts wrote in a note this morning. But what good news is left?

Not very much… the economy is recovering, though the pace of improvements is taking a hit amid the spread of the Delta variant. Meanwhile, the Federal Reserve is preparing to normalize its ultra-easy money policies.

Amid this, BofA’s models are closer to a sell signal than at any point since 2007, according to the note.

“Wage/input cost inflation and supply chain shifts are starting to weigh on margins. Interest rate risk is at a record high… And valuations leave no margin for error,” the analysts said.

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