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(Bloomberg) — A powerful rally in US stocks as well as cryptocurrencies has left the asset classes looking frothy, according to Bank of America Corp.’s Michael Hartnett.
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The S&P 500’s price-to-book ratio has surged to 5.3 times in 2024, approaching a peak of 5.5 hit in March 2000 during the height of the technology bubble, according to data compiled by Bloomberg.
BofA’s Hartnett said there’s a high risk of “overshoot” in early 2025 if the S&P 500 nears 6,666 points — about 10% above current levels. The bank’s bull-and-bear indicator shows no sign yet of exuberance among global investors.
The strategist took a more neutral tone on equities this year after remaining bearish in 2023.
The S&P 500 has surged about 27% in 2024 and is tracking its best year since 2019 on optimism around artificial intelligence and wagers that President-elect Donald Trump’s “America First” policies would boost domestic markets. His support for crypto also helped bitcoin briefly rally past $100,000 this week.
Hartnett said that with a market capitalization of over $2 trillion, bitcoin was comparable to the 11th largest economy in the world.
–With assistance from Michael Msika.
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