BlockBeats news, on June 9, Bank of America Securities stated that investors should remain cautious toward U.S. equities, as an increasing number of bearish signals suggest the market is nearing a peak. A team of strategists led by Savita Subramanian wrote in a report dated June 5 that approximately 70% of bearish signals have already been triggered, consistent with the historical average at market tops. The S&P 500 shows "statistically high valuation" in 17 out of 20 valuation metrics, with eight of these metrics exceeding levels seen during the tech bubble. Additionally, high P/E stocks have significantly outperformed low-valuation stocks, which strategists view as a sign of "excessive speculation." Within the technology sector, the performance gap between the top and bottom quintiles has widened to its highest level since February 2000.
The strong performance of the S&P 500 has "masked significant internal divergence," with the return gap between the top 10% and bottom 10% performing stocks in the index over the past three months reaching its highest level since the pandemic. While some tech stocks maintain solid fundamentals, Subramanian noted: "Cash flow conversion has stalled, supply of investment-grade bonds and equities has increased, the proportion of stock buybacks relative to market capitalization has declined, and capital expenditures by hyperscale cloud companies as a percentage of operating cash flow are projected to approach 100% by year-end, up from 40% in 2023." (Jinshi)