by Sagarika Jaisinghani and Michael Msika
A record share of fund managers see US stocks as too expensive after the sharp rally since April lows, according to a monthly survey by Bank of America Corp.
About 91% of participants indicated that American stocks are overvalued, the highest ever proportion in data going back to 2001. While investor allocation to global equities climbed to the highest since February, a net 16% were still underweight the US, the poll showed.
Overall sentiment improved to the most bullish in six months, since before President Donald Trump’s sweeping tariffs roiled financial markets and stoked worries about a recession. BofA strategist Michael Hartnett said investors now see the lowest probability of a hard landing since January.
US stocks have scaled record highs on signs of a better-than-expected corporate earnings season and optimism that the Federal Reserve will lower interest rates as economic growth slows. That’s prompted market forecasters including at Citigroup Inc. to turn more optimistic about the S&P 500’s trajectory in the second half.
Still, some strategists such as BofA’s Hartnett have warned the rally risks overheating into a bubble given a potential easing in both monetary policy and financial regulation. The bank’s August survey showed cash levels as a percentage of total assets remained at 3.9%, a level that is consistent with a so-called sell signal for stocks.
Other highlights from the poll, which was conducted from July 31 to Aug. 7 and canvassed 169 participants with $413 billion in assets:
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