Bank of America raised its stock forecast, but not in the way you may expect.

Bank of America (BAC) is becoming more optimistic about S&P 500 equities. Just not the ones that have pushed the S&P 500 upward all year.

The financial institution Monday predicted that the S&P 500 will reach 4300 by the end of the year. That’s rather daring. For starters, the new objective is roughly 8% greater than the old one. However, it also implies that megacap growth stocks will not be where the action is for the remainder of the year.

“The entire year-to-date gain on the S&P 500 was driven by seven stocks.” The top five companies are down from their highest weight, but they still account for 22% of the S&P 500, much over the Tech Bubble peak of 18%, according to BofA Strategist Savita Subramanian in the study.

Bank of America’s Newfound Confidence

If BofA is correct in its latest projection, the S&P 500 has a 2.5% — or maybe more — upside from present levels.

How? According to BofA, the S&P 500 will reach a high of 4600 this year. This is more than 9% higher than the S&P 500’s finish of 4193.63 on Monday. Remember that the S&P 500 is already up roughly 10% this year.

“Glass half-full view: the bull case for stocks,” according to the research. “The era of easy money is over, but that may be a good thing.” We’ve had decades of financial-engineered growth: low-cost borrowing, buybacks, and cost-cutting measures. Today, Corporate America is focusing on structural advantages.”

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