Bank of America Inc. (BAC  ) shares are trading lower Tuesday after HSBC downgraded the stock from Buy to Hold.

What To Know: The downgrade comes despite HSBC raising its price target on Bank of America from $47 to $51, signaling that while there may still be upside, the stock's recent rally may have already priced in most of the near-term positives.

The downgrade was part of a broader reassessment of large U.S. banks by HSBC analyst Saul Martinez, who also cut ratings on JPMorgan Chase (JPM  ) and Goldman Sachs (GS  ), according to Bloomberg. Martinez cited "downside risks" that he believes are not yet reflected in current valuations, including persistent macroeconomic uncertainty, the potential for slowing economic growth and expectations for further interest rate cuts in 2025 and 2026.

Bank of America has surged nearly 40% from its April lows, part of a strong rally in the banking sector fueled by optimism around earnings, stress test results and looser regulations. However, the KBW Bank Index, which tracks major U.S. lenders, ended an 11-day winning streak on Monday, the longest run in its history, indicating that the sector may be entering a more volatile phase.

HSBC maintained a more favorable view on super-regional banks such as U.S. Bancorp (USB  ) and PNC Financial (PNC  ), calling them better valued even after their own rallies. For now, the shift in sentiment appears to be weighing on Wall Street's biggest names, including Bank of America.

BAC Price Action: Bank of America shares were down 2.65% at $47.37 at the time of writing, according to Benzinga Pro.