Global fund managers are maintaining bullish positions on stocks even as bond yields reach levels not seen since 2007, according to Bank of America Corp.'s latest survey. The survey reveals that professional investors have allocated 56% of their portfolios to equities, the highest proportion since November 2021, despite identifying a "disorderly rise in bond yields" as the second-largest threat to the equity market.

Tyler Richey, editor of the Sevens Report Technicals newsletter, describes the rising yields as the "elephant in the room" that could derail the equity market. However, most Wall Street strategists believe yields haven't climbed high enough to undermine the bull case for stocks, noting that historical data shows sudden yield spikes aren't always detrimental to stock performance.

JC O'Hara, chief technical strategist at Roth Capital Partners LLC, advises investors to be "bullish, or at least opportunistic" given improving risk appetites driven by stronger earnings expectations and better economic outlooks. Meanwhile, Ed Clissold of Ned Davis Research highlights that the current "modestly upward sloping yield curve" provides favorable conditions for S&P 500 returns, averaging roughly 11% annually since 1976.

Despite this optimism, some experts warn that continued yield increases could eventually impact stocks. Liz Ann Sonders of Schwab Center for Financial Research suggests that yields approaching 5% might rattle the market, similar to what occurred in 2023 when the S&P 500 sank 10% amid surging yields.