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BofA Reverses Stance on Defensive Stocks in Shift to Cyclicals

  • Bank double upgrades consumer names amid abating growth risks
  • Utilities cut to sell from buy, health stocks to hold from buy

An improving policy backdrop in the U.S. and signs of stabilization in Europe and Asia have prompted Bank of America to relax its defensive stance on the American equity market.

Strategists led by Savita Subramanian raised consumer discretionary stocks to overweight from underweight, while cutting utilities to underweight from overweight. The 180-degree turn comes amid a dovish tilt by the Federal Reserve, progress toward a trade agreement and a reduced risk that President Donald Trump will be impeached after Robert Mueller’s investigation found no evidence of collusion with Russia.