As the economy braces for slowing growth and an eventual recession threatens to materialize, Bank of America is changing its outlook on the S & P 500. Equity and quant strategist Savita Subramanian cut Bank of America's price target on the benchmark index to 4,500 from 4,600 on Friday, saying in a note to clients that the bank is betting on consumer staples as a recession becomes a possibility. "The specter of a recession looms and we thus shift defensive, double-raising consumer staples from underweight to overweight," she wrote. "The sector is near a record underweight by institutional investors, and lessening labor/input cost inflation could benefit margins." Meanwhile, the bank lowered materials to underweight from market weight, citing the sector's exposure to housing and auto spending and its heightened sensitivity to changes in China. The bank remains overweight on energy, healthcare and financials, although it shifted financials to its "least favored overweight on recession risk." The change in stance from Bank of America comes as consumer prices rise and the fed hikes rates to combat surging inflation . Meanwhile, markets are undergoing an April sell-off , led by the tech sector, as investors rotate into sectors believed to be safer, such as consumer staples, energy and utilities. Since the start of the year the S & P 500 has plummeted 10%, implying a one-third likelihood that a recession is priced in in to the market, Subramanian wrote. The new S & P 500 price target implies a 5% potential return from Thursday's close for the index. Subramanian cited the war in Ukraine, the Fed's "far more hawkish stance" and worsening China growth among the reasons for the bank's shift. "What's changed since January 1? War, GDP cuts, Fed on steroids," she wrote. "We weren't forecasting a war, and the Russia/Ukraine conflict exacerbated commodity price inflation and also hit Europe GDP hard. The Fed (and other central banks) have shifted to a far more hawkish stance." Even as the broader markets struggle, the consumer staples sector has risen 3.5% this year and remains the second best-performing S & P 500 grouping behind energy. One way to play the thriving staples sector is through an ETF that tracks it — the Consumer Staples Select Sector SPDR Fund . Shares of the ETF are up 3.5% year to date and nearly 5.2% since the start of the month. Procter & Gamble , Coca-Cola , PepsiCo and Costco Wholesale are among the fund's top holdings. — CNBC's Michael Bloom contributed reporting
A woman is reflected in a puddle as she passes a Bank of America branch in New York's Times Square.
Brendan McDermid | Reuters
As the economy braces for slowing growth and an eventual recession threatens to materialize, Bank of America is changing its outlook on the S&P 500.