Bank of America(US:BAC) Zhi Tong Cai Jing·2025-10-21 00:07Group 1 - The credit market is showing signs of tightening, which may trigger a new round of declines in the U.S. stock market, as institutional investors like pension funds may be forced to sell assets [1][3] - If private lending remains weak, pension funds may have to sell index funds to avoid punitive losses from declining private asset valuations and to meet ongoing funding obligations [1] - Passive investment has dominated the S&P 500 index, meaning an economic downturn could lead to collective selling by funds tracking this index [1] Group 2 - Concerns are rising that bad loans from small banks may spread to other sectors of the stock market, with regional bank composite stock index in the U.S. dropping over 6% in a single day, marking the longest consecutive decline of the year [1] - Other institutions, such as Miller Tabak + Co., have also warned about the potential for sustained selling pressure from index-tracking funds, particularly in bank ETFs, which have shown significant weakness [3] - The S&P 500 index is statistically overvalued on 20 valuation metrics, and the ongoing three-year bull market is facing valuation risks, with the probability of a market decline increasing [3] Group 3 - Six out of ten bear market warning signals tracked by the team have already been triggered, with historical data indicating that an average of 70% of bear market signals are triggered before a market peak and subsequent decline [3] - The current bear market signals suggest that caution is warranted in investment decisions [3]