Bank of America expects the S&P 500 index returns to be relatively modest in 2026.

Odaily News Bank of America has become more cautious about the U.S. stock market, predicting that the S&P 500 index will reach 7,100 points in 2026, with a rise of about 5%. The bank stated that strong earnings do not necessarily translate into strong market returns, as valuation multiples may narrow. Bank of America forecasts a 14% growth in earnings but warns that liquidity support is weakening, with reduced stock buybacks and increased capital expenditure, while future Central Bank rate cuts are limited. The bank expects the index to fluctuate between 5,500 and 8,500 points. The company anticipates a shift in market leadership, with capital expenditure surpassing consumption, and blue-collar workers outpacing white-collar workers, thus upgrading the rating of essential consumer goods to “overweight” and downgrading the rating of non-essential consumer goods. Furthermore, Bank of America believes that artificial intelligence may be weak in the short term, stating that its monetization remains uncertain, and the continually growing demand for electricity may become a bottleneck.