The S&P 500’s recent surge to record levels has not swayed J.P. Morgan’s bearish stance. The bank has cited “lackluster” earnings and high valuations as reasons for caution.
What Happened: JPMorgan Chase & Co. strategists Dubravko Lakos-Bujas and Marko Kolanovic expressed skepticism despite the S&P 500’s recent record highs, reported Business Insider on Monday.
They pointed to underwhelming earnings results and inflated valuations as reasons for potential risk in the current stock market. The strategists also anticipate challenges from consumer companies, with a possible impact from dwindling household savings and slowing growth in China.
They also warned that high expectations for artificial intelligence companies could lead to significant stock market turbulence if these expectations are not met.
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Another concern is the possibility of interest rates remaining high longer than the market anticipates. Any resurgence in inflation or economic growth could challenge the prevailing view that interest rates will decrease in the near future.
Despite the record highs, JPMorgan’s strategists have set a year-end S&P 500 price target of 4,200, representing a potential 13% decline from current levels and one of the most pessimistic forecasts on Wall Street.
Why It Matters: The S&P 500’s recent record highs have been a topic of much discussion. On Jan. 22, the index continued its upward trajectory, with the Dow Jones Industrial Average and the Nasdaq 100 reaching their all-time highs. This has led to growing excitement in the markets, although some analysts, like JPMorgan, have raised concerns about the sustainability of this trend.
Despite these concerns, overall market sentiment has been positive, with the CNN Money Fear and Greed index showing further improvement and remaining in the “Greed” zone. This was accompanied by a surge in the S&P 500 to an all-time high, with all three major indices now in the positive zone for 2024.
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