BofA warns investors: be cautious in September market pullback

In early September 2024, the stock market experienced a pullback, leading to a decline of 2.5% in the S&P 500 during the first three trading sessions. This downturn has made many stocks appear more attractive, but Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, advises caution among investors. She emphasizes the importance of avoiding risky investments and suggests focusing on safer, total-return vehicles, particularly in the utilities and real estate sectors. Subramanian highlights that the Real Estate Select Sector SPDR Fund (XLRE) and Utilities Select Sector SPDR Fund (XLU) have both seen gains of over 5% in the past month, indicating a potential refuge for investors. The market's volatility is compounded by seasonal headwinds and ongoing uncertainty regarding the U.S. economy's health, as evidenced by the August employment report, which showed job growth falling short of expectations. Political factors are also contributing to market instability, with the U.S. presidential election approaching in two months. Subramanian notes that election years typically bring increased volatility from July to November, and this year is no exception. Investors are faced with potential significant changes in policy depending on the election outcome, particularly concerning energy and immigration. In a separate development, JPMorgan has upgraded Nio's stock rating from neutral to overweight, citing a significant drop in its stock price this year and the potential for a rebound driven by financial and operational improvements. This reflects a broader sentiment on Wall Street regarding the need for strategic investment choices in a challenging market environment.