Bank of America warns that the AI boom and rising inflation are increasing market risks, advising to reduce positions and take profits in early June

Mars Finance News, on May 15, Bank of America’s Chief Investment Strategist Michael Hartnett warned in the latest “Flow Show” weekly report that, as capital continues to pour into the stock and technology sectors, early June may become a window for investors to take profits. Hartnett said the current AI boom, intensifying inflation, and “momentum-chasing” capital inflows are pushing the market toward a dangerous zone. He noted that the U.S. April PPI rose to 6% year over year, while CPI rose to 3.8% year over year—both above expectations. If inflation keeps growing at its current pace over the coming months, the U.S. CPI could break above 5% before the midterm elections in mid-November. He considers CPI rising above 4% an important inflection point at which risk assets begin to come under pressure, and said historical data shows that once inflation exceeds 4%, the S&P 500 index tends to fall by an average of 4% over the next 3 months and 7% over the next 6 months. In addition, Bank of America’s bull-bear indicator has risen to 7.6, nearing the “sell signal” range around 8.0. Hartnett also pointed out that the current semiconductor index SOX is deviating from its 200-day moving average by as much as 62%, already surpassing levels seen during the internet bubble period. In terms of fund flows, the latest week saw global equity funds inflow of $20.5 billion, technology stocks inflow of $5.4 billion, while crypto funds saw outflows of $1.3 billion—the largest weekly outflow since February 2026.