JPMorgan Turns Bullish on US Stocks, Favors Tech and Bank Shares
JPMorgan's institutional market intelligence trading desk has upgraded its stance on US stocks from 'tactically cautious/neutral' to 'tactically bullish'. The team, led by Andrew Tyler, cites improvement in economic data, corporate earnings, and bond yield conditions as reasons for the shift.
The five core arguments supporting this view are: macro fundamentals beating expectations, consumer resilience, room for upward earnings revisions, stabilizing Treasury yields, and improving technicals. Tech remains the core long position, but the team no longer recommends shorting the Russell 2000 Index as a hedge, instead using derivatives to express short-squeeze risk.
The desk expects semiconductors and the 'Magnificent Seven' to outperform the broader market, with bank stocks relatively favored within non-AI sectors. However, they also listed several unresolved medium- to long-term risks, including whether the bond market is underestimating the terminal rate of the Federal Reserve hiking cycle.
The team believes a US jobs report showing 90,000 new jobs in September could prompt the market to price in additional rate hikes prematurely. They are also watching key earnings reports and economic data releases this week, including the PCE price index and ISM manufacturing index.