Bank of America strategist Savita Subramanian warns that an economic upswing may not drive strong equity returns. She argues strong EPS and GDP growth historically mark the worst phase for S&P 500 performance, as markets perform best when expectations are low and disaster is averted.

BofA’s above-consensus GDP outlook and +14 percent earnings forecast point to middling returns, not a boom. A key reason is the index's top-heavy in AI composition, not GDP-sensitive cyclicals. An economic boom could lift cyclicals, but they're a smaller part of the benchmark.

The bank’s U.S. Regime Indicator has shifted back toward a Downturn, a backdrop favoring mega caps and Quality. Despite this, fund managers have swung from Stagflation to Boom, adding complexity. BofA’s year-end target of 7,100 for the S&P 500 implies only about 3 percent upside.