Bank of America: The S&P 500 is about to trigger a sell signal, and the "Big Beautiful" bill raises the risk of a summer bubble

Bank of America strategists warn that the recent strong rebound in U.S. stocks has pushed the S&P 500 index close to a key technical sell signal, while the passage of the "Big Beautiful" bill is exacerbating the risk of a market bubble this summer.

According to Bank of America strategist Michael Hartnett in a recent report, he advises investors to start reducing their stock holdings once the S&P 500 rises above 6,300 points. Currently, the S&P 500 is up 0.83% to 6,279.35, leaving only a 0.3% upside to the target price.

This warning comes as the U.S. House of Representatives has just passed a $3.4 trillion "Big Beautiful" bill, which Hartnett believes increases the likelihood of a market bubble this summer. Despite the market returning to historical highs due to the U.S. economy continuing to show resilience and President Trump softening his stance on tariffs, the risk of trade tensions remains.

Technical Sell Signal Approaches, Speculative Frenzy Rekindled

As the S&P 500 index returns to historical highs, it is approaching an important sell threshold set by Bank of America. Hartnett clearly states that 6,300 points is the level at which investors should consider starting to sell stocks.

Although the sell signal is imminent, he also acknowledges that market sentiment may continue to push the index higher in the short term. Hartnett wrote in the report:

"An overbought market may remain overbought for a while, as greed is harder to overcome than fear."

The recent upward momentum in the U.S. stock market primarily stems from two factors: first, data showing that the U.S. economy remains resilient, and second, President Trump's softened stance on tariffs. According to media reports, these factors have collectively ignited speculative enthusiasm in the market.

In this environment, technology-heavy stocks have regained favor, and the market's enthusiasm for artificial intelligence concepts has also reignited. According to data charts compiled by the media, the S&P 500 index is on track for its third consecutive month of gains, having rebounded strongly from the decline in early April.

Despite the optimistic market sentiment, trade issues remain a core risk for investors. Wallstreetcn previously mentioned that Trump stated he would send tariff letters to trade partners on Friday, with rates potentially ranging from 60%-70% to 10%-20%