Bank of America Warns US Stock Market May Drop in Imminent ‘Buy the Rumor, Sell the Fact’ Event: Report
Bank of America (BofA) is issuing a warning on US equities, saying that a correction in the stock market may be approaching next week.
BofA strategists say a dip in US stocks following the Federal Reserve’s Jackson Hole Symposium on August 21st-23rd is within the realm of possibility, according to a note seen by Bloomberg .
The bank’s analysts, led by strategist Michael Hartnett, say that investors have been piling into riskier trades like equities, crypto assets and corporate bonds due to optimism that the Fed will begin cutting interest rates, easing the government’s debt obligations and propping up the labor market.
With the expectations already centered around Fed Chair Jerome Powell giving off a dovish tone at Jackson Hole, Hartnett says investors may be pushed into a “buy rumor, sell fact” trade, putting pressure on an increasingly hot market.
Hartnett also says that gold, commodities, crypto assets and emerging market (EM) assets will be key winners in a trend of investors looking to hedge against a weaker dollar.
In a recent survey, BofA found that 91% of polled fund managers think US stocks are overvalued, the highest rate since 2001.
The bank’s poll also found that investor allocation in foreign markets has climbed to its highest weight since February, signalling a potential sentiment shift away from US markets.
Hartnett warned that the recent stock market rally may be at risk of turning into a bubble, especially given that the bank’s survey showed that cash levels as a percentage of total assets were at 3.9% – a level that has historically signalled an incoming sell-off.
Generated Image: Midjourney
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Decoding VitaDAO: A Paradigm Revolution in Decentralized Science

Mars Morning News | ETH returns to $3,000, extreme fear sentiment has passed
The Federal Reserve's Beige Book shows little change in U.S. economic activity, with increasing divergence in the consumer market. JPMorgan predicts a Fed rate cut in December. Nasdaq has applied to increase the position limit for BlackRock's Bitcoin ETF options. ETH has returned to $3,000, signaling a recovery in market sentiment. Hyperliquid has sparked controversy due to a token symbol change. Binance faces a $1 billion terrorism-related lawsuit. Securitize has received EU approval to operate a tokenization trading system. The Tether CEO responded to S&P's credit rating downgrade. Large Bitcoin holders are increasing deposits to exchanges. Summary generated by Mars AI. The accuracy and completeness of this summary are still being iteratively improved by the Mars AI model.

The central bank sets a major tone on stablecoins for the first time—where will the market go next?
The People's Bank of China held a meeting to crack down on virtual currency trading and speculation, clearly defining stablecoins as a form of virtual currency with risks of illegal financial activities, and emphasized the continued prohibition of all virtual currency-related businesses.

