Bank of America: Low market breadth is a bubble characteristic; AI trading has not yet reached the breaking point

According to Chaowang Research, a BofA Securities research report dated October 6, 2026, indicates that while the S&P 500 and Nasdaq have withstood surges in bond yields, market breadth remains at historic lows. Tech stocks exhibit an asymmetric response to 10-year yields, with gains during yield declines averaging roughly three times the losses during yield increases. Over the past month, the Nasdaq has risen approximately 6%, while the 10-year yield has climbed by about 50 basis points. Approximately 15 S&P 500 constituents carry a Bubble Risk Indicator (BRI) above 0.8, representing about 2% of market capitalization, compared to 50 to 100 stocks at the peak of the dot-com bubble, which accounted for 20% to 40% of market cap.