Bank of America (BAC) stock is soaring 5% in Monday's pre-market trading session, following a significant upgrade from Morgan Stanley. The move comes amidst broader market turbulence and concerns over the banking sector's outlook.

Morgan Stanley analyst Betsy Graseck raised Bank of America to Overweight from Equal Weight, citing the stock's recent underperformance and attractive valuation. Graseck noted that BAC has been "the worst performing money center bank year-to-date" due to market concerns about potential Federal Reserve rate cuts and changes in the yield curve affecting the bank's net interest margin expansion. Despite these challenges, Graseck believes the stock now offers an appealing entry point, trading at just eight times her 2026 earnings projection and with an expected return on equity of 11% in the coming year.

The upgrade comes at a crucial time for the banking sector, as major U.S. banks prepare to kick off the earnings season later this week. While Bank of America's stock has fallen 21.8% year-to-date through last Friday, today's surge suggests investors are finding value in the company despite ongoing concerns about the broader economic outlook. The banking sector has been under pressure due to fears of a potential recession and the impact of President Trump's recent tariff announcements, which have rattled global markets and raised concerns about future loan demand and credit quality.