Bank of America issues warning: S&P 500's inability to rally signals weakness, Trump may consider intervention to prop up the market.

Bank of America strategist Michael Hartnett said investors were becoming increasingly "skeptical" about further gains in the S&P 500 as European and Chinese stocks performed well. "The longer it takes to make a new high, the harder it is, and the more skepticism builds," Hartnett said in an interview. "Europe is working, China is working, even US bonds are working." The strategist recommended international stocks over US stocks this year because he expected the so-called FAANG stocks to become volatile after driving US stocks higher since the start of 2023. While he said investors were not bearish on the large tech stocks, they were easily vulnerable to a sell-off if the trade "doesn't work". This year, US stocks lagged the rest of the world as investors questioned their high valuations and huge spending on artificial intelligence. The S&P 500 is up less than 2 per cent in 2025, while the FAANG basket is down 3.3 per cent. In contrast, the MSCI World ex-US index is up 7 per cent. US stocks lag global markets Hartnett said investors would look for fiscal intervention from the Trump administration if the S&P 500 fell to 5,600-5,700 (down as much as 6 per cent from current levels). "The stock market is his traffic light," the strategist said of Trump.