Markets
JPMorgan Predicts Continued Strength in US Stock Market for 2024
Jun
JPMorgan Chase & Co.’s asset management division anticipates that a historically strong start to the year for the US stock market will continue through the latter half of 2024. While the rise may be more gradual compared to the substantial gains seen since January, key factors such as strong earnings, the conclusion of the Federal Reserve’s monetary-tightening campaign, and economic resilience are expected to sustain US equities.
Moderate but Positive Returns
In their mid-year outlook report, JPMorgan’s strategists, led by Chief Global Strategist David Kelly, highlighted that return expectations should be more moderate moving forward. They pointed to healthy earnings growth and significant valuation dispersion as indicators that the environment remains favorable for equity performance, offering opportunities for alpha generation. The strategists recommend investing in large-cap stocks and a blend of value and growth shares.
JPMorgan advises moderate return expectations, emphasizing large-cap stocks and balanced value-growth investments for alpha opportunities, WSJ Subscription Offers said.
S&P 500 Performance and Fed Projections
On Thursday, the S&P 500 experienced slight fluctuations after Fed officials projected just one interest-rate cut in 2024, fewer than expected by traders. Nevertheless, the US equities benchmark remains close to a record high. This surge is fueled by optimism over a possible Fed rate reduction and ongoing enthusiasm for AI technology. Major tech firms such as Nvidia Corp. and Microsoft Inc. have seen substantial gains as a result.
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Broadening Market Strength
Kelly and his team observed a stronger market in 2024 compared to last year. Improving breadth and a broader earnings recovery have boosted shares beyond the technology sector. Bloomberg data indicates that every S&P 500 sector, except real estate, has risen year-to-date. At this point last year, only five of the index’s 11 sectors were in the green.
Risks and Diverging Opinions
Despite the optimistic outlook, the strategists acknowledged some risks. The uncertain adoption timeline of artificial intelligence and its concentrated market enthusiasm pose potential concerns. Additionally, slowing economic growth could impact profit margins if corporate pricing power diminishes.
These concerns pale in comparison to the bearish outlook expressed by JPMorgan market strategist Marko Kolanovic. He continues to warn of a potential market downturn. Within JPMorgan, the asset management division and the trading desk led by Andrew Tyler hold differing opinions and diverge from Kolanovic’s more cautious stance.
Supportive Economic Backdrop
The end of monetary tightening and robust nominal GDP growth supports US equities for the rest of the year. JPMorgan’s asset management strategists concluded this in their latest analysis. They reinforced their positive outlook for the market in the coming months.
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