Bank of America warns of 'froth' in crypto and stocks as S&P 500 valuation surpasses 2000 bubble

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Stock Markets,Michael Hartnett,Business News

The S&P 500 hit a new record again on Friday even as a better-than-expected jobs report could call into question whether the Fed should continue lowering rates in 2025.

Relentless rallies in multiple risk assets into the year-end have caused widely followed strategist Michael Hartnett to sound the alarm on a bubble forming. The price of bitcoin soared past the long-awaited $100,000 benchmark for the first time ever late Wednesday evening. Meanwhile, the S & P 500 and the blue-chip Dow notched more record highs this week, powered by continuous strength from technology shares.

He also raised a red flag on the S & P 500's valuation, where its price to book ratio has topped its previous high from March 2000 during the Dotcom bubble. The strategist said the risk of an "overshoot" is now "high" as the S & P 500 "melts" towards 6,666, around 10% from the current levels. The equity benchmark closed Thursday at 6,075.11. The Wall Street firm's Savita Subramanian had set her 2025 S & P 500 target at 6,666.

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