Bank of America raises S&P 500 target but warns of near-term pullback
Bank of America has raised its year-end price target for the S&P 500 to 7,400 from 7,100. However, this new level still implies a potential 3% decline from current market levels. The bank also introduced a longer-term 12-month target of 7,800, which suggests only about 2% upside from where the index stands now. The note highlights that while the long-term outlook for U.S. equities remains positive, near-term volatility is likely due to an historically overdue market correction and weak seasonal performance in September and October. Bank of America warns that inflation expectations are underestimated by current valuations—pricing in 1.7% versus a forecasted average of around 3% over the next three years. The firm also notes deteriorating earnings quality, with free cash flow lagging behind reported net income, as well as growing reliance on AI-driven growth which remains uncertain and complex.
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Topics: Bank of America market correction price target S&P 500