Investing.com -- Bank of America downgraded its view on the U.S. chemicals sector after a sharp selloff and worsening macro conditions, cutting price objectives by 15% on average.

The sector is down 15% year-to-date, underperforming the S&P 500 by roughly 7%, with much of that gap emerging since early April.

Weakening global trade and cyclical demand are key drivers of underperformance, and analysts warn of lower degree of confidence than normal in earnings forecasts.

Though BofA upgraded Westlake and Element Solutions (NYSE: ESI ) to “Buy,” and Archer Daniels Midland (NYSE: ADM ) and DuPont (NYSE: DD ) to “Neutral,” while downgrading Air Products (NYSE: APD ) and Dow to “Underperform,” and PPG (WA: IBSP ), Huntsman (NYSE: HUN ), and Green Plains (NASDAQ: GPRE ) to “Neutral.”

While many sectors are contending with U.S. import tariffs, BofA noted the chemical sector is facing pressure from retaliatory trade actions, including China’s 125% tariff on U.S. crops. U.S. petrochemicals, particularly polyethylene and PVC, also rely heavily on exports.

The sector’s primary challenge is lower demand and pricing, rather than cost inflation, the analysts wrote, adding that energy cost relief offers some buffer, though inflation remains a risk for coatings firms.

BofA is more constructive on agriculture stocks, where the cycle may be at or near a trough.

It sees relatively limited macro impact given companies’ global footprints, though U.S. farm incomes remain vulnerable to crop tariffs.

The firm struck a cautious tone on commodity chemicals, despite steep stock declines, and flagged a weakening outlook for clean hydrogen and coatings.

BofA’s top picks include industrial gas giant Linde (NYSE: LIN ), ag firms Corteva (NYSE: CTVA ) and Mosaic, and chemical names Eastman Chemical (NYSE: EMN ) and Westlake, all of which has strong balance sheets and company-specific growth drivers.