BCA Research has changed its recommendation on U.S. stocks to neutral, aligning with a similar decision announced by HSBC on Thursday, following revised employment data that revealed the labor market was considerably weaker than earlier thought.
In a new research note, BCA said the annual payroll revisions showed that the expansion in payrolls for 2025 was "even stingier and more narrowly concentrated than previously estimated." The firm highlighted that payroll growth actually dropped below its "stall-speed" threshold in August 2024 rather than in June 2025, even as corporate profits and the broader economy continued to perform without clear disruption.
BCA pointed to structural changes as a factor in how weaker hiring has not produced the consumption decline one might expect. The firm specifically cited gains in household wealth and a strengthened social safety net as forces that have reduced "compensation’s influence over consumption," helping households sustain spending despite slower job growth.
While BCA acknowledged that spending exceeded income for much of the prior year, it noted that a surge in income in January narrowed that gap. The research note also referenced the One Big Beautiful Bill Act, saying it "should help narrow it further as taxpayers receive refunds."
Given this backdrop, BCA said it is "less concerned about an impending US recession" but has nonetheless rebalanced its global allocations. The firm downgraded the United States to equal weight in global equity portfolios and upgraded the Euro Area to equal weight. On currencies, BCA moved the U.S. dollar to underweight and raised the euro to equal weight.
In fixed income, BCA Research removed its prior preference for rates over credit. The firm characterized the economic environment as one in which "the expansion remains intact" even in the presence of softer job growth, and adjusted its fixed-income stance accordingly.
Clear summary
BCA Research shifted U.S. equities to neutral after payroll revisions showed weaker and more concentrated 2025 job gains, cited structural changes that have dampened the link between wages and spending, and adjusted global equity, currency and fixed-income preferences.
Key points
- BCA downgraded the U.S. to equal weight and upgraded the Euro Area to equal weight in global equity allocations - impacting equity positioning between regions.
- The firm moved the dollar to underweight and the euro to equal weight - reflecting currency repositioning tied to the economic assessment.
- BCA removed its preference for rates over credit in fixed income, citing an intact expansion despite softer jobs data.
Risks and uncertainties
- Labor-market weakness: Payrolls fell below the firm’s stall-speed threshold earlier than previously believed, creating uncertainty for sectors sensitive to hiring trends, including consumer-focused industries.
- Household finances: Although income surged in January and fiscal measures may provide refunds, the durability of consumer spending relative to income remains uncertain, affecting retail and services sectors.
- Policy and allocation timing: Adjustments to equity and currency allocations hinge on how structural factors and fiscal measures play out; outcomes remain uncertain for currency markets and regional equity performance.