BoA bullish US stocks despite “boiling geopolitical instability”, waning US fiscal health

Bank of America analysts reaffirm their belief that U.S. equities remain firmly positioned within a secular bull market that originated from the depths of the 2008-2009 Global Financial Crisis (GFC). The bullish trajectory, they note, first solidified in 2013 when the S&P 500 surpassed its pre-GFC all-time highs.

Despite significant disruptions, including the pandemic-induced pullback and the 2022 bear market correction triggered by surging inflation and aggressive monetary tightening, the upward trend remains intact. The S&P 500 has surged roughly 60% from its October 2022 lows and notched an impressive 37 all-time highs this year alone.

From a broader secular perspective, the rally since the 2009 lows—amounting to a 733% gain—appears “modest” compared to previous secular bull markets, which delivered advances of 1,159% and 2,353%, respectively.

Looking ahead, Bank of America acknowledges that challenges persist over the next decade, including structurally higher inflation and interest rates relative to the post-GFC era, rising geopolitical tensions, and growing concerns over U.S. fiscal sustainability. However, the analysts point to emerging “positive offsets” that could act as key drivers of long-term equity growth.

While risks loom large, the bank suggests that U.S. equities remain poised to leverage new avenues for sustained growth, reinforcing the resilience of the current secular bull market.

This article was written by Eamonn Sheridan at www.forexlive.com.