BofA warns U.S. stocks face early June 2026 profit-taking as inflation, sentiment risks rise

Bank of America strategists warned U.S. equities could face profit-taking in early June 2026 as investors crowd into stocks while inflation pressures reaccelerate across energy, transportation and rents. A team led by Michael Hartnett said April data showed producer price inflation rising to 6%, the fastest pace since 2022, while consumer price inflation reached 3.8%, above economist forecasts. The strategists warned CPI could exceed 5% before the November 2026 midterm elections unless monthly gains slow quickly. BofA said historical data show risk assets tend to weaken once CPI rises above 4%, with the S&P 500 falling an average 4% over three months and 7% over six months. The 10-year Treasury yield has moved above 4.5%, while the 30-year yield has topped 5%. The bank also cited stretched positioning, with private clients’ equity allocation at a record 65.7% and cash at a record-low 9.8%. The S&P 500 and Nasdaq 100 have rallied 18% and 29%, respectively, since March 30, 2026, led by AI-driven semiconductor gains.