Bank of America warns that U.S. stocks are too enthusiastic, with an inflow of US$40 billion in two weeks, the largest since February last year | Anue Juheng-U.S. Stock Radar

As the Christmas holiday approaches, Wall Street banks are telling investors to curb their enthusiasm for stocks.

Bank of America strategist Michael Hartnett said on Friday (24th) that the reverse “buy” signal for stocks has expired weeks after it was triggered.

The analysis team lowered its bull and bear indicator to 1.9 on October 20 from the previous 2.2, which is in the “extremely bearish” zone. When this bull-bear indicator falls below 2.0, a counter-trend buy signal for risk assets is triggered.

But on Friday, the indicator climbed from 1.7 to 2.1 and moved towards the “neutral” territory, as shown below:

Because investors have been fond of the stock market recently, this has pushed up stock prices. According to the latest Flow Show report released by Bank of America on Friday, U.S. stocks saw a two-week weekly inflow of US$40 billion, the largest since February 2022.

Hartnett warned that investors almost collectively believe that “the Federal Reserve (Fed) has finished raising interest rates.” According to a Bank of America survey in November, 80% of fund managers expected an interest rate cut, of which 82% expected inflation to fall and 61% expected bond yields to fall.

The analyst and his team warned,10-Year Treasury Bond YieldIt may make the coming year difficult, with the market at a high risk appetite of 4% to 5%. If it drops to 3% to 4%, it may trigger calls for an economic recession and turn more bearish.

In the latest week ended November 21, $40 billion flowed into cash instruments, with $16.5 billion flowing into equities, $4 billion flowing into bonds, and $700 million flowing intogold。

So far in November, FactSet data shows S&P 500 It has risen 8.6%. If it maintains this level, it will be the index’s largest monthly gain since July 2022.

Last week’s subdued inflation data boosted U.S. stocks and triggered a buying frenzy.S&P 500 Exponential sumNasdaqThe index had its best day since April. Inflation data triggered market expectations and laid the foundation for the stock market to rise at the end of the year.

Not only is Hartnett cautious, Savita Subramanian, head of equity and quantitative strategy at Bank of America, expects S&P 500 The index will close at 5,000 next year, 10% above current levels, in part because there are too many shorts in the stock market who lack conviction and are sitting on piles of cash at odds with AI enthusiasts, fund managers and others.she expected S&P 500 The index reached 4600 points this year, which seems to be more accurate than other peers.