Bank of America sees more upside for stocks despite 'fresh wave of bear narratives'

, would weigh more heavily on megacap tech stocks than midcap stocks.

With five companies accounting for 25% of the S&P 500 index, Subramanian notes the S&P 500 is "more top heavy than ever."This, she argues, means opportunity lies in the other companies that haven't been run up amid the artificial intelligence boom. Based on data since 1999, BofA found the average S&P 500 year-end target at the end of August typically projects 5% gains through the end of the year. In the rare years when strategists see the benchmark index declining from it's August close, the S&P 500 actually performs better than normal.

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BofA lifts S&P 500 2023-end target by 7%, led by 'old economy' stocksThe S&P 500 is up 15.7% so far this year, largely driven by a rally in a handful of mega-cap growth stocks such as Nvidia and Meta that have ridden the artificial intelligence (AI) boom. While the rally has been moderating, BofA remains in 'neutral' to 'positive' territory on U.S. stocks, with a bias towards equal-weighted stocks, strategists led by Savita Subramanian said. An equal-weight index assigns uniform weights to each constituent, unlike a market capitalization-based index, like the S&P 500, where bigger companies tend to have an outsized influence.
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