Bank of America: U.S. Stock Market Dominance to Fade by 2025

Bank of America's strategic outlook for 2025 suggests a shift in global equity market dynamics, with the U.S. stock market's dominance expected to decline. The bank's strategists, including Michael Hartnett, anticipate that the continuous rise of the U.S. stock market will come to a halt in early 2025, marking the beginning of a fading leading edge.

The strategists point out that so far this year, stock markets in Brazil, Germany, the UK, China, and Canada have outperformed the S&P 500 index. This trend is attributed to the failure of the so-called seven major tech companies to provide the momentum they have long relied on. In light of this, Bank of America recommends long positions in Chinese stocks, expecting that the trade and tech war will not escalate.

On the bond side, Bank of America expects the U.S. Treasury yield to drop below 4%. The bank anticipates that U.S. President Trump will address the government spending issue to prevent a spiral of debt escalation, while also seeking congressional approval for his tax cut plan.

The bank's strategic outlook highlights a potential shift in global equity market dynamics, with the U.S. stock market's dominance expected to decline. This shift is driven by the outperformance of other major stock markets and the waning influence of the seven major tech companies. Bank of America's recommendation to take long positions in Chinese stocks reflects the bank's expectation that the trade and tech war will not escalate, presenting an opportunity for investors to capitalize on the potential growth of the Chinese equity market.