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Traders work on the floor of the New York Stock Exchange October 28, 2014.BRENDAN MCDERMID/Reuters

The oil slump will nearly wipe out expected growth in U.S. profits this year, removing one the key supports holding up U.S. stocks, according to Bank of America Merrill Lynch.

The bank's analysts are now forecasting a "lost year of EPS growth," on the S&P 500 index, as the plunge in oil benchmarks comes to bear on profitability in the coming quarters.

Previously, BofA was expecting growth in earnings per share of 5.1 per cent for 2015. But, with the bank now forecasting average crude oil prices in the low $50s over the next year, it predicts earnings growth of just 1.3 per cent.

That estimate is far below consensus, with industry analysts predicting earnings growth of 7.7 per cent this year, according to a FactSet report from two weeks ago.

"We think double-digit EPS growth next year would require an aggressive reversal of this year's commodity and currency headwinds and/or a strong acceleration in global growth led by Europe and emerging markets, which is not in our base case," BofA said.

Still, the S&P 500 should be able to overcome the pressure from the energy crash, BofA's head of U.S. equity and quantitative strategy Savita Subramanian said in a separate report.

Despite little promise for earnings growth, the U.S. stock market is "still the best house on a bad block," the report said. Compared to other major equity benchmarks, the U.S. index has a higher return on equity and a higher proportion of high-quality stocks, plus corporate America is flush with cash.

"A reallocation to U.S. stocks from other regions and from other asset classes could drive the market to new highs in 2015," Mr. Subramanian said. He maintained a 2015 year-end target of 2,200 for the S&P 500, which would represent a 6.9 per cent gain from 2014's year-end close.

Getting there, however, will not likely be a smooth trajectory. "The peak in global liquidity expectations suggests the end of the abnormally low levels of volatility we have seen in recent years," Mr. Subramanian said.

"We continue to recommend that investors lengthen their investment time horizons and use pullbacks in the S&P 500 as buying opportunities."