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Bank of America warns of an ‘ominous’ sign for stocks

Bloomberg Published on Wed, Aug 16, 2017 / 11:38 AM GMT+8

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(Aug 16): Money managers who’ve watched the surge in corporate profits take US equities to records are starting to fret about earnings growth, and that’s an “ominous” sign, Bank of America says.

Just 33% of managers in the bank’s latest survey say corporate profits profits will improve, down from 58% at the start of the year.

The drop represents a “warning sign for equities over bonds, high yield over investment grade, and cyclical sectors over defensive ones,” chief investment strategist Michael Hartnett wrote in a note Tuesday. “Further deterioration is likely to cause risk-off trades.”