Margin debt growth slows sharply as stock market warning signs build

Borrowing costs are cooling fast for stock investors, and Bank of America says the shift resembles warning patterns seen before prior market pullbacks. FINRA data cited by BofA shows annual growth in margin debt fell to 31.4% in September from 53.7% in May, a strategist said in a Friday note. The bank points out that prior extremes in margin growth occurred in 2000, 2007 and 2021, each followed by stock market declines. Margin debt at $1.48 trillion is 1.5% below June’s record. BofA also flags widening high-yield credit spreads and a move into defensive sectors that it says are reaching “bubble-risk levels.”