JPMorgan Chase transforms into a "bull market flag bearer": The S&P 500 is about to hit a new high, with short-term pullback risks being controllable and unlikely to see a second correction

According to the Zhitong Finance APP, Wall Street financial giant JPMorgan Chase's trading division remains bullish on U.S. stocks, emphasizing that the recent benchmark stock index for U.S. stocks—the S&P 500 index—is unlikely to undergo a new round of significant downward correction. However, the risk of a pullback in the S&P 500 index due to Moody's downgrade of the U.S. credit rating is rising, but the extent of the pullback will be very narrow. JPMorgan Chase, which has maintained a cautious stance on U.S. stocks in recent years, expects the index to soon reach a historical high, officially joining Goldman Sachs in leading Wall Street's "bull market banner."

"The S&P 500 index has broken through 5,900 points, a level seen as both a resistance point and a milestone for 'high-level buying' returning to the U.S. stock market," wrote market intelligence experts from JPMorgan Chase's trading division in a research report on Monday.

"Next stop? 6,144 points is the historical highest closing point, just 3.1% away from last Friday's closing level. We still maintain a tactical bullish stance and expect the S&P 500 index to soon break through its historical high." JPMorgan Chase's experts also noted that the short-term pullback risk for the S&P 500 index is rising, but "the possibility of another downward correction is very low."

What factors could trigger an extremely limited short-term pullback? JPMorgan Chase's market intelligence experts provided the following clues:

"AI chip leader" NVIDIA (NVDA.US) underperforms expectations. "Since the low on April 8, the S&P 500 index has surged 19.6% towards a bull market, with the 'Mag7' (the seven major tech giants in the U.S. stock market) contributing 30.5% to the increase... Given that chip procurement is a significant achievement of the Trump administration's trade negotiations, the risk/reward of this earnings report leans positive. However, if the performance guidance falls short of market expectations, it could lead to a collective pullback of the seven major tech giants, which would impact the entire U.S. stock market," JPMorgan Chase stated.

Trade negotiations are stalled or the U.S.-China trade agreement faces "negative shocks" again. "Given the positive effects of U.S.-China trade negotiations, a 10% tariff seems to have become the new baseline."

Negative factors related to positioning. "Our market strategy team has noted a slowdown in retail buying power, macro hedge fund short covering is basically complete, and overseas investors have not significantly bought into U.S. stocks. Overall, while the current positioning level is not a resistance to the stock market's upward movement, it may no longer provide significant support for continued increases."

Another Wall Street financial giant, Morgan Stanley, stated that investors should buy any U.S. stocks that fell due to the downgrade of the U.S. government's credit rating last Friday, as the temporary truce in U.S.-China trade reduces the likelihood of a U.S. economic recession. Morgan Stanley noted that the downgrade by Moody's led to the 10-year U.S. Treasury yield rising above 4.5%, increasing the likelihood of a market pullback; however, the team led by senior strategist Michael Wilson wrote in a report: "When the stock market pulls back, we will choose a buy-the-dip strategy." The Morgan Stanley strategy team led by Wilson warned in March that the volatility of the U.S. stock market would continue into the second half of this year. However, this strategist is now one of the few Wall Street voices optimistic about U.S. stocks rather than international markets