the us stock market as measured by the sp 500 index appears to be exiting the “best era” for growth in earnings per share in decades as sources of liquidity have dried up according to research from bank of america the sp 500’s earnings per share are “more cyclically peaked than ever from low financing costs buybackfueled growth and peak stimulus” equity and quantitative strategists led by savita subramanian said in a bofa global research note tuesday “secular eps growth is at a multidecade high” bofa which has forecast the sp 500 spx will see 200 in earnings per share in 2023 says “now is not a time to buy the crowded market index” but the strategists said that “shifts in liquidity should drive opportunities within and outside of the index” “we may be exiting the best sp eps era but we are likely entering the best stock pickers market in our careers” they said “we recommend being invested in equities but selectively” the strategists shifted their view of the materials sector to overweight from underweight while moving utilities down to market weight from overweight they also moved communication services up to market weight from underweight as facebook parent meta platforms inc’s meta stock buyback program lowered the sector’s duration risk the report shows read meta stock spikes nearly 20 as cost cuts and 40 billion for investors overshadow earnings miss the sp 500 a gauge of largecap stocks in the us is up more than 4 so far this year based on tuesday afternoon trading the index’s communicationservices sector has soared almost 11 year to date while shares of companies in materials have risen around 3 and the utilities sector is down almost 5 according to factset data at last check “we like the capitaldeprived sectors” the bofa strategists wrote financials home builders materials and fossil fuels are areas of the market that have been “starved of capital” for more than a decade while technology is among those that have “enjoyed free money amplifying the duration risk of the sp 500” “bloated growth sectors still need to rationalize capacity after overbuild” they said “deflating a treasury bubble will be unkind to bondlike and long duration stocks” “three sources of liquidity have dried up” the bofa strategists said pointing to the end of the federal reserve’s quantitative easing program seen during the pandemic as well as fiscal and corporate stimulus the fed bought bonds including us treasurys under quantitative easing the central bank is now in a period of socalled quantitative tightening allowing bondholdings to run off its balance sheet “the two biggest buyers of treasuries – china and fed – are done” the strategists wrote while fiscal stimulus is “unlikely” on the fiscal front the strategists cited the possibility of “gridlock” in congress along with “deficit hawks’ nuclear option using the debt ceiling to force spending discipline” and now companies are “belt tightening” they said with layoffs seen in some areas see ‘it depends on how close to the brink we go’ stock market turmoil likely if us teeters toward a default analysts say the strategists said their eps forecast for the sp 500 this year is based on “a softlanding offset by corporates’ nimble margin preservation a capex cycle and a stronger consumer” in a longer hiking cycle by the fed the fed has been hiking interest rates to combat high inflation resulting in a rise in treasury yields that last year pummeled equities particularly growth and tech stocks read will recession slam the stock market here are 3 ‘landing’ scenarios as fed keeps up the inflation fight the yield on the 10year treasury note tmubmusd10y was up about 14 basis points tuesday afternoon at around 396 factset data show at last check treasury bond yields and prices move in opposite directions meanwhile bofa has a yearend target of 4000 for the sp 500 the us stock market was trading sharply lower tuesday afternoon with the sp 500 sliding 19 to around 4003 according to factset data at last check the techheavy nasdaq composite comp was down 22 while the dow jones industrial average djia shed 19 amid the rise in treasury yields also see buy the stockmarket dip why ‘cash’ yielding more than it has since 2007 could be king