The head of US Equity Strategy at Bank of America Securities says broad market gains from current levels will be difficult to sustain.
Appearing on CNBC’s Power Lunch, Savita Subramanian say BofA has a year-end price target of 7,100 for the S&P 500 and remains bearish on the index level.
She says the Russell Large Cap Value Index is the best single-index buy right now, pointing to its income-generating profile. Within the broader market, she sees opportunity in value and cyclical names, but warns that the tailwinds that drove last year’s gains have largely disappeared.
Subramanian notes that 2025 was “essentially the best year ever in terms of liquidity,” with individual investors, corporate buybacks, privatizations and government agencies all buying U.S. stocks at the same time. According to her, this dynamic will not repeat itself in 2026.
According to Subramanian:
“The good news is priced in. Years where you have big earnings growth and GDP growth are generally not the best years for stock returns. We are seeing a big shift in demand versus supply, which is why we are bearish at the index level. Within the index, I think there is a huge opportunity to own income value areas of the market that are throwing away capital rather than using it.”
Subramanian also questions how much more earnings can surprise, noting that analysts are now predicting near-record long-term earnings growth rates, with strong earnings already expected.
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