BofA Strategists at Odds Over Presence of ‘Euphoria’ in Stocks

Wall Street is so divided on whether the US stock market’s meteoric rise has gone too far, too fast that even Bank of America Corp.’s own strategists disagree.

There is little evidence that the frenzy for artificial-intelligence is pushing the market into bubble territory, according to BofA’s Savita Subramanian.

The bank’s head of US equity and quantitative strategy once again pointed to strong earnings and a resilient US economy and sees further room for gains. Her view runs counter to what the firm’s chief investment strategist Michael Hartnett said last week.

“There’s no broad spread euphoria,” Subramanian said in a joint interview with Jill Carey Hall, the firm’s head of small- and mid-cap strategy on Bloomberg Television. “The risks are sitting outside of the public market,” adding that private credit and private equity, along with regional banks are where credit risks are bubbling up.

The S&P 500 Index climbed above the significant 5,100 milestone for the first time in history this year, with the gauge already beating the average year-end forecast of 4,962. The benchmark has advanced nearly 8% to start the year after rising 24% in 2023 leaving Wall Street to debate if the stock market is due for a reversal.

Subramanian’s view appears to diverge from BofA’s Hartnett who said on Thursday that rapid price appreciation and other characteristics of a bubble are forming in the so-called Magnificent Seven stocks and across the world of crypto.