Investors' allocation to US equities drops as S&P 500 falls

According to the Bank of America (BofA) survey, investors' allocation to US equities dropped by 40% in March compared to February. Such decline is attributed to a 10% drawdown in the S&P 500 over the past month.

Sharp correction in the S&P 500 can be considered as a buy signal. However, BofA strategists believe that the recent market moves reflect excessive bullish activity rather than an attractive opportunity to purchase stocks.

Investors' portfolio allocation to cash increased from 3.5% to 4.1%. However, cash levels are still well below the more than 6% mark recorded in October 2022, the bank's experts emphasize. According to the BofA survey, more than half of respondents are concerned that escalating trade tensions could trigger a global recession.

Morgan Stanley chief investment officer Mike Wilson also spoke on this topic. In his words, a steady rise in US stocks to new record highs will take place only after numerous factors preventing their growth are eliminated, or the Fed resumes interest rate cuts.