JPMorgan Shifts to Cautious US Equity Outlook After Fed Remarks

JPMorgan Chase has downgraded its outlook on US equities from bullish to 'tactically cautious' following remarks by Federal Reserve Chairman Kevin Warsh at Jackson Hole.

The market-implied odds of a September rate hike jumped to around 57% to 60%, up from 35% to 40% beforehand, prompting JPMorgan's market intelligence team to pump the brakes.

Andrew Tyler, who leads JPMorgan's market intelligence team, framed the downgrade as a response to near-term uncertainty about the Fed's rate path rather than any deterioration in the economy or corporate earnings.

The underlying fundamentals still look solid for the longer term, but the current market expectations suggest that rates could push above 4% if Barclays' forecast proves correct and the Fed delivers hikes in both September and December.