BofA warns stock market faces a ‘snapback’ and will lose much of this year’s gains

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โดย Fortune·Read original
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Bank of America warns the stock market is about to suffer a ‘snapback’ and will lose much of this year’s gains as speculation hits extreme levels. The bank reaffirmed its year-end S&P 500 price target of 7,100, representing a 5% drop from the week’s closing level, and noted that high multiple stocks have gapped up demonstrably, an event that has historically preceded a valuation snapback. BofA also highlighted that S&P 500 companies are generating less free cash flow relative to net income compared to historical trends, partly due to massive AI spending by hyperscalers eroding earnings. The Federal Reserve is expected to hike rates three times this year to fight sticky inflation, and the S&P 500 is more expensive ahead of a first rate hike than any other cycle except 1999-2000. Recent extreme volatility in chip stocks and indexes like South Korea’s Kospi has raised concerns about excessive froth, with Capital Economics noting similar selloffs have only occurred during major bear markets.

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