Bank of America strategists indicate that the ratio of the nasdaq 100 index to the s&p 500 index is approaching a level that could trigger a closure of trades in the usa stock market.

The team at Bank of America, led by Michael Hartnett, states that the ratio of the technology-heavy nasdaq 100 index to the s&p 500 index remains above the high reached in 2000, 'allowing investors to confidently go long on usa technology stocks and the dollar.'

In a report, they warned that a drop below this level would strongly encourage people to exit the trade of 'usa exceptionalism.'

Hartnett noted last week that investors should start allocating more funds to stocks outside the usa next year, recommending stocks in china and europe. After a more than 20% rise in the previous year, the s&p 500 index has increased another 25% year to date.

According to Bank of America strategists, if history is a guide, the s&p 500 index could see double-digit gains or losses again in 2025. They stated that the 'secret' to further rebounds in the usa stock market is a decline in bond yields.

However, the team expects bond prices to reflect rising inflation early next year and a decrease in the pace of rate cuts by the Federal Reserve, keeping yields elevated and limiting the upside potential for risk assets. Bank of America's cni investment clock index also suggests that commodities will rise, corporate profits will grow, and interest rates will increase in 2025.

Driven by a strong usa economy, Federal Reserve rate cuts, and the boom in ai development, the s&p 500 index continues to trade near historical highs. According to Bank of America's report, usa stock funds are expected to attract a record inflow of funds this year, reaching an annual scale of 448 billion dollars.

In contrast, the "unpopular" european stock fund is expected to see an outflow of 58 billion dollars in 2024.

Editor/rice