Bank of America projects that the S&P 500 will see relatively modest returns in 2026.

According to Odaily Odaily, Bank of America has become more cautious about the US stock market, predicting the S&P 500 will reach 7100 points by 2026, an increase of approximately 5%. The bank stated that strong earnings do not necessarily translate into strong market returns, as valuation multiples may narrow. Bank of America forecasts 14% earnings growth but warns of weakening liquidity support, reduced share buybacks, increased capital expenditures, and limited future interest rate cuts by central banks. The bank expects the index to fluctuate between 5500 and 8500 points. The company anticipates a shift in market leadership, with capital expenditures exceeding consumption and blue-collar workers exceeding white-collar workers, thus upgrading its consumer staples rating to "overweight" and downgrading its consumer discretionary rating. Furthermore, Bank of America believes artificial intelligence may be weak in the short term, stating that its monetization remains uncertain, and growing electricity demand could become a bottleneck.