Boosted by profit and interest rate cut, JP Morgan predicts that the US stock market will continue its surge in the second half of the year
JPMorgan Chase's asset management department predicts that the strong start of the U.S. stock market in 2024 will continue into the second half of the year. Despite a more moderate market growth, the U.S. stock market will still be boosted by solid earnings fundamentals, the end of the Federal Reserve's monetary tightening policy, and strong economic performance. JPMorgan Chase recommends that investors allocate to large-cap stocks and balance investments between value stocks and growth stocks. The market's enthusiasm for artificial intelligence technology has driven the rise of technology stocks. So far this year, all sectors of the S&P 500 Index have seen gains except for the real estate sector. While there are risks to the outlook for artificial intelligence and a slowdown in economic growth could impact corporate profit margins, JPMorgan Chase has not issued a warning of a stock market crash
According to the Zhitong Finance and Economics APP, the asset management department of JPMorgan Chase predicts that the strong start of the U.S. stock market in 2024 will continue into the second half of the year. David Kelly, the Chief Global Strategist of the bank, and his team pointed out in their mid-year outlook report that despite the double-digit returns of the S&P 500 index since January, market growth may be more steady than rapid. However, thanks to a solid profit base, the end of the Federal Reserve's monetary tightening policy, and strong economic performance, the U.S. stock market is expected to remain buoyant in the coming months.
Kelly and his team emphasized in the report: "Although return expectations should be more moderate, healthy profit growth and widespread valuation dispersion indicate that the market environment is still favorable for stock performance, providing investors with opportunities to achieve excess returns." They recommend investors to allocate to large-cap stocks and balance investments in value and growth stocks.
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After the announcement that Federal Reserve officials expect to cut interest rates only once in 2024, the S&P 500 index rose slightly on Thursday, showing a positive market response to the central bank's interest rate cut expectations. Nevertheless, the benchmark index of the U.S. stock market remains close to historical highs, with the market's continued enthusiasm for artificial intelligence technology driving significant gains in large tech stocks such as NVIDIA (NVDA.US) and Microsoft (MSFT.US).
The Kelly team pointed out that compared to last year, this year's market is not only strong, but stock prices are also generally rising, thanks to a broader profit recovery, especially in stocks outside of the tech giants. Bloomberg data shows that so far this year, all sectors of the S&P 500 index except for the real estate sector have seen gains, compared to only 5 sectors that were up at the same time last year.
Although strategists believe that there are risks in the outlook for artificial intelligence, as only a few companies are leading the market enthusiasm and the timeline for the application of artificial intelligence is still unclear, they also point out that the risk of economic growth slowing down should not be ignored, as this could impact corporate profit margins.
However, JPMorgan Chase asset management strategists are not issuing warnings of a stock market crash like the bank's bearish market strategist Marko Kolanovic. While there may be different views within Wall Street firms, the asset management department of JPMorgan Chase and its trading department clearly have differing opinions from Kolanovic's views Finally, strategists at JPMorgan Asset Management concluded: "The end of monetary tightening policies, coupled with strong growth in nominal Gross Domestic Product, provides a positive backdrop for the US stock market for the remainder of this year." This indicates their optimistic outlook on the long-term prospects of the US stock market