Equity allocations decline as cash, commodities gain favor, BofA says

Investing.com -- Equity sentiment held steady in December even as investors continued shifting toward safer assets, according to Bank of America.

The bank’s Sell Side Indicator (SSI), a contrarian gauge of strategists’ recommended equity allocations, was unchanged at 55.9% last month after rising in October and November.

BofA strategist Victoria Roloff said the SSI nevertheless fell 1.1 percentage points overall in 2025, noting that “declining equity allocations were offset by a move into cash and commodities.”

Despite an 18% gain for the S&P 500 in 2025, equity recommendations remain well below historic peaks, according to the bank.

BofA noted that the SSI is “less than 2ppt away from a ‘Sell’ signal,” adding that while the indicator is more bullish than bearish, its current level “is still below levels reached in prior market peaks (typically >59%).”

Roloff stated that the current reading implies a “healthy S&P 500 price return of 12% over the next 12 months,” making the SSI the most bullish input into its target.

Strategists’ price targets paint a somewhat more optimistic picture. According to BofA, Bloomberg’s consensus expects the S&P 500 to rise 10% in 2026. If that forecast is met, the index’s total return since the end of 2022 “would exceed 100%, the best four-year gain since 1999.”

BofA remains more cautious, maintaining a 2026 target of 7,100, about 4% above current levels. The bank cited “growing capital-intensity of big tech spenders,” elevated valuations and emerging “cracks in the labor market” as reasons for restraint.

You May Also Be Interested In

• Goldman, BofA vie to manage Anthropic employee wealth post-IPO - report
• EagleOne Metals closes $225,199 non-brokered private placement
• AstraZeneca's camizestrant fails primary endpoint in breast cancer trial