Bank of America analysts slash S&P 500 projection as ‘specter of

The S&P 500 just suffered its worst April performance since 1970, plunging into its second correction of the year — now, many experts are lowering their projection for the index this year.

Bank of America analysts led by Savita Subramanian trimmed their year-end outlook for the S&P 500 by 100 points to 4,500, which would mark more than a 6% drop from the beginning of 2022. In April, the benchmark S&P index dropped about 8.8%. It is down about 13.48% so far this year, indicating that the market has priced in about a one-third chance of a recession, according to the BofA analysts. 

FED RAISES INTEREST RATES FOR FIRST TIME IN 3 YEARS, PROJECTS 6 MORE HIKES AS INFLATION SURGES

“The specter of a recession looms,” Subramanian wrote. “And we thus shift defensive, couple-raising consumer staples from underweight to overweight.”

There are several threats to the outlook, including worsening economic growth in China, the Russian invasion of Ukraine on Feb. 24 and an increasingly hawkish Federal Reserve that’s looking to aggressively tighten monetary policy in order to tame inflation. 

Night view of logo of the Bank of America Tower. It is an American multinational banking and financial services corporation. (Roberto Machado Noa/LightRocket via Getty Images / Getty Images)

“This is all against a backdrop of cyclically peaked S&P 500 EPS facing secular margin pressure (de-globalization), still lofty valuations and a Fed taper still in play,” Subramanian said. 

The note comes amid growing fears on Wall Street over an economic recession triggered by the Fed as it looks to combat inflation, which is at the highest level since December 1981. Policymakers raised rates by a quarter-percentage point in March, and have since signaled that sharper, half-point increases are likely in the coming months, beginning in May.

“It is appropriate to be moving a little more quickly,” Fed Chairman Jerome Powell said last month during a panel discussion at the International Monetary Fund and World Bank spring meetings. “I also think there’s something in the idea of front end-loading whatever accommodation one thinks is appropriate. So that points in the direction of 50-basis points being on the table.”

Traders are now pricing in a 100% chance of at least a half-point rate jump when policymakers meet this week. It would mark the first time since 2000 that the U.S. central bank raised the federal funds rate by 50 basis points.

The U.S. economy’s growth is likely slowing as 2020 comes to a close, but a growing number of economists expect it to claw back to its pre-pandemic strength by the second half of next year. (AP Photo/Mark Lennihan / AP Newsroom)

Some economists believe the Fed waited too long to confront the burst in inflation, while others have expressed concerns that…