BofA predicts post-rally collapse in US stocks

The S&P 500 may have technically entered a bull market last week, but Bank of America Corp.’s Michael Hartnett says it’s not the start of a major new rally in equities.

The strategist, who accurately predicted the sell-off in stocks last year, said in a note Friday that he was not convinced this was the start of a “brand new, bright bull market”.

Hartnett wrote in the bank’s weekly investment report that the current market looks more like 2000 or 2008, with “a big rally before the big crash.”

The index rose by 15 percent to 4,425 points this year.

In February, Hartnett expressed his expectation that the S&P 500 would fall to 3,800 points by March 8; however, this prediction did not materialize after investors turned defensively to tech companies. He said bears like him were wrong in the first half because the US economy was avoiding a recession and a credit crisis. He described the AI-powered technology rally as “an unexpected event”.

“Equities may remain high and credit spreads may remain low until the Fed ‘reacts fear’ through a higher target for rates and the unemployment rate surpasses 4 percent, a signal of recession,” Harnett wrote.

At the same time, Citigroup Inc., led by Beata Manthey. Its strategists said the U.S. market could continue to outperform its European counterparts, even though the rally was led by relatively few stocks.

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