As 2024 draws to a close, Trump is set to officially move into the White House in January next year, and the overall US stock market is filled with joy. $S&P 500 Index (.SPX.US)$ Once surpassing the important threshold of 6000 points, multiple Wall Street major banks have raised their target points for the index next year.

However, Bank of America issued a warning, mentioning a 'key threshold.' The bank stated in a recent report that if the Nasdaq 100 index (Nasdaq 100) deteriorates further relative to the Standard & Poor's 500 index (S&P 500), it could threaten US stocks, especially the rise of technology stocks.

Simply put, the bank explained that the Nasdaq index is currently performing even more strongly relative to the s&p 500 index than during the internet bubble period of 2000. But once their relative performance falls below the 2000 high point, it will bring troubles.

American Bank strategist Michael Hartnett wrote, "Focus on $NASDAQ 100 Index (.NDX.US)$ / $S&P 500 Index (.SPX.US)$ Because it fell below the high of 2000, it will prompt investors to exit the 'US exceptionalism' trading.

Against the backdrop, throughout 2024, investors have been pouring a large amount of money into tech-heavy Nasdaq, targeting stocks related to emerging artificial intelligence (AI) technology. But now, with the US stock market performing at a 75-year high relative to other regions worldwide, Bank of America forecasts that the 'USA exceptionalism' theme may be nearing its peak.

The above report states that due to the possible tightening of the American financial situation, traders will increase their allocation to Asian and European international markets in the first quarter.

Among them, Bank of America expects Chinese stocks to perform well in 2025. Despite Chinese tech stocks being 'less popular' earlier, the 26% increase so far this year is on par with the 34% increase in American tech stocks.

It is worth noting that Bank of America is not sure whether this will lead to a decline in the S&P 500 index, as analysts expect the benchmark index to experience double-digit growth or decline in 2025.

"It all depends on the U.S. Treasury market - continuously declining bond yields will be like a 'secret sauce' that can further catalyze the stock market's rise," Bank of America analysts wrote.

Conversely, higher yields on U.S. bonds mean a 'great reversal.' Bank of America strategists predict that as the bond market adapts to the upcoming 'inflation boom' and lower interest rates, yields will rise further, which will limit the rise of risky assets in early 2025.

Editor/rice