U.S. Stocks Face Risk of Summer Pullback
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: CNBC
- Market Pullback Warning: Bank of America strategists indicate that the S&P 500 has reached its annual target of 7,430, suggesting limited room for further gains, prompting investors to prepare for a summer pullback to protect existing profits.
- Deteriorating Risk-Reward: The strategists noted in a client report that the risk-reward profile is deteriorating, with multiple technical indicators showing that the upward momentum is becoming stretched, leading investors to shift from chasing gains to protecting them.
- Weakening Market Breadth: Despite a sharp rebound in U.S. stocks during the recent Middle East conflict, the weakening market breadth and diverging momentum signals suggest that the next upward leg could be more challenging, necessitating caution among investors.
- Optimistic Long-Term Outlook: Despite the near-term pullback risk, Bank of America still forecasts that the market will rebound to 8,000 by the end of 2026, aligning with the second year of the U.S. presidential cycle, reflecting confidence in future market recovery.
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Analyst Views on BAC
Wall Street analysts forecast BAC stock price to rise
19 Analyst Rating
15 Buy
4 Hold
0 Sell
Strong Buy
Current: 50.770
Low
55.00
Averages
61.64
High
71.00
Current: 50.770
Low
55.00
Averages
61.64
High
71.00
About BAC
Bank of America Corporation is a bank holding company and a financial holding company. Its segments include Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking and Global Markets. Consumer Banking segment offers a range of credit, banking and investment products and services to consumers and small businesses. The GWIM includes two businesses: Merrill Wealth Management, which provides tailored solutions to meet clients' needs through a full set of investment management, brokerage, banking and retirement products and Bank of America Private Bank, which provides comprehensive wealth management solutions. Global Banking segment provides a range of lending-related products and services, integrated working capital management and treasury solutions, and underwriting and advisory services. Global Markets segment offers sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity, and equity businesses.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Wealth Management Revenue Forecast: The wealth management division is projected to see revenue growth in the low teens year-over-year, reflecting ongoing demand for asset management and investment advisory services, highlighting clients' focus on wealth enhancement.
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- BAA Team Contributions: The Boston Athletic Association (B.A.A.) team raised nearly $450,000 during the event to support its mission of promoting a healthy lifestyle through sports, particularly running, showcasing the positive impact of athletic activities on community engagement.
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- Artwork Restoration Plans: The Art Gallery of Ontario in Toronto also received funding to restore three works by modernist pioneer Pegi Nicol MacLeod, ensuring these significant pieces can be displayed to the public again, thereby enhancing recognition of her artistic legacy.
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- Software Sector Pressure: The software industry accounts for 19% of private credit collateralized loan obligations, and as growth slows and margins compress, the repayment capacity of these loans is expected to be negatively impacted, adding to market uncertainty.
- Liquidity Crisis: With constrained liquidity, investors are beginning to attempt to withdraw funds, particularly with significant withdrawal requests anticipated in June, which could exert further pressure on the market and lead to more default events.
- Pension Fund Risks: While some large state pension funds continue to maintain investments in private credit, their significant risk exposure could have spillover effects on the broader financial markets, especially given that banks have loaned approximately $300 billion to private credit, potentially putting retail investors at risk.
See More
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- ETF Impact Analysis: Bank of America comprises 7.94% of the First Trust Nasdaq Bank ETF (FTXO), which is trading lower by about 0.7% on the day, indicating the bank's significance in the financial market despite the ETF's decline.
- Stock Performance Comparison: In Thursday trading, Bank of America's preferred stock (BAC.PRN) rose about 0.5%, while the common shares (BAC) fell about 0.4%, demonstrating the relative stability of preferred shares amid market fluctuations.
- Investor Focus: Market analysts suggest paying attention to S.A.F.E. dividend stocks with preferred shares, indicating that investor preference for stable income may influence future investment decisions.
See More
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- Project Partnerships: Dubbed Project Lightwell, the initiative has already attracted major U.S. banks such as Goldman Sachs, Morgan Stanley, JPMorgan, and Bank of America as early adopters, indicating strong market confidence and demand for IBM's new platform.
- Innovation Driven by Technology: CEO Arvind Krishna noted that Anthropic's Mythos model was a pivotal factor in driving this investment, highlighting the potential of large language models to discover and exploit vulnerabilities in code, which could reshape the cybersecurity landscape.
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