The S & P 500 is expected to fall about 14% to 3800 by the end of the year.

From corporate profits to investor confidence, the good news has been "digested by the market"

Bank of America is pouring into the stock marketClients may want to listen carefully to the forecasts of the bank's chief equity strategist, who thinks the S & P 500 will fall and favours value stocks.

"We expect the S & P to be at 3800 by the end of the year," Jill Carey Hall said in an interview on Friday. "A lot of the good news this year has been digested by the market."

Her forecast means that the benchmark index of US stocks will fall about 14 per cent from its current level. Carey Hall's speech followed the Labor Department's announcement that job creation in July was 943000, better than the market had expected, and that the previous two months' data had also been revised upward.

In terms of strong earnings growth andWith low interest rates boosting investor confidence, the S & P 500 is nearing a record high and nearly doubling from its low during the epidemic. This bullish sentiment has pushed Bank of America, a measure of strategist optimism, to post-crisis highs.

"the price-to-earnings ratio of the index is already very high," Carey Hall noted. "the sentiment indicators we track are getting more and more bullish, and our Wall Street confidence index is very close to the sell signal. I think the earnings season shows that a lot of good news has been digested. "

For example, shares of companies that reported profits higher than analysts' expectations "didn't perform very well," she said. "except for the last quarter, the last time we saw this happened around March 2000." The s & p 500 fell 10% that year.

Carey Hall recommends cyclical stocks that usually perform better as the economy grows, as well as value stocks rather than growth stocks.

"We still like some cyclical defensive stocks," she said. "We overweight energy stocks and overweight financial stocks. We are still bullish on value rather than growth stocks. These value stocks are usually cheap and underheld by institutions relative to growth stocks. "

Technology-intensive NASDAQThe 100 index lagged behind other major benchmark indexes on Friday.