Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

JPMorgan cautious on equities ahead of Q2 earnings season

Published 03/07/2023, 08:38 pm
© Reuters.
SPY
-

JPMorgan strategists reiterated their cautious stance on U.S. equities as they believe the market resilience is unlikely to last.

The bank’s strategists argue that economic data is likely to worsen in the second half of the year while corporate earnings will come under pressure. Hence, they say the market “needs to resolve a basic disconnect: how will the Fed pivot if there is no pain?”

“We believe that the consensus view that the worst of pressures is behind us will be proven wrong, as the impact of monetary tightening has historically worked with a lag, and certain growth supports are waning, such as excess savings and strong profit margins,” strategists said in a client note.

Hence, they add that the tech sector “could struggle to advance further in 2H” unless the leadership broadens.

“If markets weaken in 2H though, as we expect, the US was typically a less risky market than others in downturns. We advised last October to turn more positive on Tech, and are OW Growth vs Value this year, but the sector run has been exceptional, and Tech could face some air pockets.”

One of the core pillars of JPMorgan's bearish stance on U.S. equities is the belief that corporate pricing power is likely to weaken from here.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.