Bank of America warns investors against extreme market optimism

Bank of America issued a warning to global investors, saying that extreme optimism and low cash reserves – only 3.6 % of assets compared with 4.1 % a month earlier – signal imminent market volatility. Its Bull & Bear indicator reached 9.4 out of 10, prompting the bank to advise investors to cut back on aggressive purchases of U.S. stocks and other high‑beta assets. The warning cites AI‑driven speculation, record valuations in semiconductor companies, unstable oil prices and massive capital spending by large tech firms as factors that could trigger credit stress.

The advisory is based on a survey of 181 fund managers who collectively oversee about $484 billion in assets. The same caution was highlighted in a Brazilian market briefing that also covered local political polls, an Embraer jet launch and other regional news, underscoring the broader relevance of the BofA outlook for investors worldwide.