Bank of America predicts further declines in the S&P 500, suggesting the index could drop to 5,268, according to a Friday note. The benchmark closed Thursday at 5,585.29, marking Wall Street's first correction since 2023.

BofA cautions that rising cash levels will be key for spotting a buying opportunity. Chief Investment Strategist Michael Hartnett explained, We say buy SPX at 5,300 once BofA FMS cash surges above 4%, HY spreads approach 400 basis points, and equity outflows accelerate.

Hartnett added that if cash levels in the upcoming global fund managers survey, due March 18, rise from 3.5% to 4.1%, the current sell signal for risk would be negated, indicating that much of the correction may be over. The 5,300 level represents a 4% fall from Thursday's close.

However, investors are hesitant and still holding off, given ongoing economic uncertainty, before raising hopes of a reversal of the downturn.