Bank of America cuts S&P 500 year-end forecast

Traders on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

Bank of America Merrill Lynch reduced its year-end target for the S&P 500 on Tuesday, blaming the August stock market correction fueled by China's troubles.

In a note to clients, BofA equity strategist Savita Subramanian highlighted a shift in sentiment from the investment banks' quantitative models to neutral from positive on U.S. stocks.

To reflect these changes, Subramanian now expects the S&P to end this year at 2,100, implying an upside move of 7.7 percent from here compared to 13 percent previously, based on an estimate of 2,200.

"The worst is probably behind us, but the road is still bumpy," said Subramanian, explaining that the market appears to be in a "data-dependent mode," which will lead the S&P to continue to struggle until signs of stabilization arise from emerging markets in particular.