Usually big Wall Street banks are pretty moderate in their outlooks, and they are mostly bullish in general. Well, Bank of America Merrill Lynch didn’t hold back this week when they said the S&P 500 was at risk of a 16.5% tumble in the near term. The bank said that it expects the S&P 500 to fall 20 to 30 bp for every basis point increase in the ten-year Treasury. The bank thinks yields will rise 55 bp by the end the year, implying an up to 16.5% tumble in stocks. The bank says valuations are overstretched by almost every metric.
FINSUM: The bank did point out three sectors it felt were safer, which are energy, communications services, and health care.