Bank of America Signals Potential Shift from Megacap Dominance in Equity Markets

Bank of America's equity strategists suggest the decade-long reign of megacap stocks may be nearing its end. Savita Subramanian, head of US equity and quantitative strategy, notes that while history favors continued large-cap outperformance, an impending Fed rate cut cycle and potential shift to a 'Recovery' market regime could redistribute gains.

The S&P 500's top 50 constituents have outpaced the broader index by 73 percentage points since 2015 - a concentration not seen since the dot-com bubble era. The late 1990s parallel raises eyebrows, as that period preceded a dramatic rotation into value and small-cap stocks during the early 2000s.

BofA's proprietary regime indicator, tracking earnings revisions, inflation trends, and growth projections, currently shows markets transitioning from Downturn phase - typically favorable for cash-rich megacaps - toward what may become a more diversified leadership landscape.