Investors are growing increasingly bullish as the stock market rally rolls on to end 2024. 

In Bank of America's December Global Fund Manager Survey, 36% of respondents said they're overweight US equities, the highest level seen in the survey's history. This large shift into US stocks came alongside a record-low allocation to cash and a three-year high in global risk appetite. 

It also falls in line with recent calls across Wall Street for US "exceptionalism" to continue in 2025. Bank of America investment strategist Michael Hartnett noted that excitement about Donald Trump's second-term, optimism surrounding growth in the US, and the Federal Reserve cutting interest rates drove "super-bullish sentiment" in the survey. 

The widespread bullishness comes as investors are increasingly confident the global economy won't enter recession in 2025. Just 6% of respondents to the survey said they believe the global economy will experience a "hard landing," — where higher rates spark a downturn in economic growth — over the next 12 months. This marked the lowest percentage of respondents calling for a hard landing in six months. 

Amid signs of sticky inflation and resilient economic growth, 33% of investors said they expect a "no landing" in the global economy where growth remains strong but inflation doesn't fall to the Fed's 2% target. 

"We're kind of bouncing a bit back between a soft landing outlook that I think most of us had certainly before the election to a no landing outlook," Daniel Morris, BNP Paribas Asset Management chief market strategist told Yahoo Finance. "Maybe inflation doesn't go down the way the Fed projects it to. And alongside that, you don't see the slowdown in economic growth."

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Bank of America's survey wasn't all positive. Investor's allocation to cash dropped from 4.3% in November to 3.9% in December. The move out of cash and into stocks can indicate that the market rally has reached an overstretched level. 

A cash position below 4% in BofA's survey has typically been a short-term "sell" signal, per Hartnett. Dating back to 2011, the MSCI World Index has fallen on average 2.4% in the next month, and 0.7% in the three months after the signal flashes. 

Notably though, the same "sell signal" was triggered in Bank of America's October survey. Since then, the MSCI, which Bank of America tracks via BlackRock's iShares MSCI ETF (ACWI), had rallied more than 1% entering Tuesday's trading day.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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