Bank of America expects the S&P 500 (SPX) to rise to 7,100 in 2026, which marks the lowest price target among Wall Street firms so far and implies upside of roughly 4% from current levels.
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Head of U.S. equity and quantitative strategy Savita Subramanian warned in an appearance on CNBC’s “Squawk Box” that AI-related companies with heavy weights in the benchmark index aren’t “economically sensitive” and could experience “significant multiple compression.”
Subramanian Highlights Labor Market AI Risks
Subramanian added that a downside to AI expansion is that it may threaten jobs, which could lead to lower consumption. Other firms, like Goldman Sachs and Oppenheimer, point to AI as a tailwind for earnings growth.
Subramanian notes that investors should have an overweight allocation to the consumer staples sector and underweight allocation to consumer discretionary stocks heading into the new year.
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