Catenaa, Friday, October 23, 2026- Bank of America says US investors will likely stay tactically in risk-off mode till mid-November.
“We stay tactically risk-off until mid-Nov,” BofA Strategist Michael Hartnett wrote in a note to clients, Bloomberg News reported. “Expect down-in-yields, down-in-stocks, down-in-US-dollar trade.”
Hartnett warned that investors may not have fully accounted for Democrats gaining control of both chambers of Congress in November. According to Bloomberg, the strategist believes such an outcome could increase uncertainty over corporate tax and regulatory policies, potentially weighing on earnings expectations.
Another factor that would signal a revival of risk appetites would be the European Central Bank or French government stepping in to reverse the rout in French bond yields, Hartnett said, according to Bloomberg News.
Hartnett suggested that financial pressures on major AI infrastructure developers could begin to ease once credit markets see evidence of reduced spending commitments or companies raise substantial equity capital. Such developments could signal that borrowing-cost pressures are approaching a peak.
Bloomberg News reported that investors continue to pile into AI-related sectors. EPFR Global data cited by the bank showed the largest weekly inflows into technology stocks since July. A Bank of America survey this month also showed that global investors are the most exposed to tech since August 2020.
“Since early October, there have been increasing signs that markets are becoming less willing to fund the AI infrastructure build-out,” BofA analysts said in another note on AI capex, according to Investing.com, pointing to AI data center developer Firmus withdrawing its planned initial public offering (IPO) due to weak demand.
Billionaire Ken Griffin warned this week that investors are “almost certainly” in the midst of an AI bubble, Bloomberg News reported.
BofA said it remains concerned about the AI capex outlook, citing both rising funding costs that squeeze incremental returns and the risk of disappointing monetization as competitive pressure erodes pricing power, a pattern the bank said has followed prior large-scale capex cycles.
An equal-weighted version of the S&P 500 Index, a proxy for market breadth, had its best day since 2024 on Thursday, relative to the market-cap-weighted S&P 500.
Defensive consumer staple stocks, meanwhile, are on track for their best month since 1998.
