Bank of America warns: If the credit storm escalates, pension funds may be forced to liquidate index funds, potentially becoming the next bomb for U.S. stocks

Bank of America strategists warn that tightening credit markets may force pension funds to sell index funds, leading to a sharp decline in U.S. stocks. Savita Subramanian pointed out that if private lending remains sluggish, institutions like pension funds may collectively sell stocks to avoid losses from asset valuation downgrades. Concerns about bad loans at small banks have intensified, with the regional bank stock index declining for four consecutive weeks. She advised investors to be selective in their investment choices and noted that the S&P 500 is overvalued on several metrics, with bear market signals already triggered