The stock market now represents a third of all U.S. household assets, according to data from the Federal Reserve.
Now, 33% of all household wealth comes from stocks. It beats the previous record, 30%, which took place in 2021 and the 27% from before the dot-com bubble in the first quarter of 2000.
The S&P 500 and the Nasdaq Composite have both been reaching new records over the past weeks, buoyed by increased spending in artificial intelligence. The former has climbed 10% so far this year.
The data noted that the richest 10% of households owned 87% of all household wealth stemming from stock market holdings.
However, some market participants are warning that a correction could be in store. Bank of America strategists told investors to brace for a potential "summer correction."
"Risk-reward is deteriorating, and multiple indicators favor a more defensive stance," the strategists wrote. "Base case: maintain trend-following longs into June, prepare for summer correction."
According to the firm, several technical indicators suggest the rally is becoming overextended. It pointed specifically to weakening market breadth and diverging momentum signals, signs that fewer stocks are participating in the advance even as headline indexes continue climbing.
The bank also warned that the next leg higher for stocks could prove more difficult as investors confront a mix of economic and political uncertainties in the months ahead, including inflation pressures, interest-rate policy, and the 2026 U.S. election cycle.
Rather than continuing to aggressively chase gains, Bank of America suggested investors begin focusing more on protecting profits accumulated during the rally. Still, the firm stopped short of turning outright bearish on the market.
Its base-case scenario calls for investors to maintain long positions through June before bracing for increased volatility and a possible correction between June and September. The strategists expect stocks to stabilize later in the year, forecasting a fourth-quarter rebound that would align with historical trends seen during the second year of a U.S. presidential cycle.
Historically, markets often experience heightened volatility during summer months, especially during election years and periods of geopolitical uncertainty. Despite its near-term caution, Bank of America remains optimistic about the broader outlook for equities over the longer term. The bank said it ultimately expects the S&P 500 to climb to 8,000 by the end of 2026, matching a forecast by Goldman Sachs.
