The head of US equity strategy at Bank of America Securities says broad market gains will be difficult to sustain from current levels.
Appearing on CNBC’s Power Lunch is Savita Subramanian He says Bank of America maintains a 7,100 year-end price target for the S&P 500 and remains bearish on the index.
The best buy for one index today is the Russell Large Cap Value Index, she says, noting its income-generating profile. Within the broader market, she sees opportunity in value and cyclical names, but warns that the tailwinds that drove last year’s gains have largely faded.
Subramanian notes that 2025 was “basically the best year ever when it comes to liquidity,” with individual investors, corporate buybacks, privatizations, and government entities buying up U.S. stocks simultaneously. She says this dynamic will not be repeated in 2026.
According to Subramanian:
“The good news has been priced in. Normally years with big earnings growth and GDP growth are not the best years for equity returns. We are seeing a huge shift in demand over supply. That’s why we are bearish across the index. Within the index, I think there is tremendous opportunity to own income value areas of the market that are dumping capital rather than using it.”
Subramanian also questions how much earnings could surprise, noting that analysts are now expecting near-record long-term earnings growth rates with already strong earnings forecast.
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