Stock Market Behavior is ‘Ominously Close’ to 2008, Warns BofA’s Hartnett

The stock market is showing signs similar to those before the 2008 financial meltdown, according to Bank of America strategist Michael Hartnett. These include higher oil prices and volatility in private credit markets.

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“Asset performance in 2026 is more ominously close to price action seen from mid’07 to mid’08,” wrote Hartnett in a note to clients. He added that investors are still expecting a short-lived U.S.-Iran war, driving bullish sentiment in the market.

Energy Prices and Credit Tightening Threaten Earnings

Higher energy costs and restrictive financial conditions could lead to lower earnings, which pose a greater risk than inflation, according to Hartnett. He suggested selling oil above $100 per barrel and offloading the S&P 500 (SPX) if it drops below 6,600.

Investors have also become concerned about stagflation in recent weeks, which is characterized by high inflation, high unemployment, and stagnant economic growth. The Bureau of Economic Analysis announced this morning that core personal consumption expenditures (PCE), the Fed’s preferred gauge of inflation, rose by 3.1% in January, the highest since March 2024.

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