JP Morgan: Short-term outlook for US stocks is optimistic; Broadcom's earnings report + non-farm payrolls will serve as strong catalysts
JP Morgan analysts are optimistic about the short-term rise of U.S. stocks, believing that Broadcom's earnings report and U.S. non-farm payroll data will serve as strong catalysts. Although they maintain a bullish stance on U.S. stocks, confidence has weakened due to escalating trade war rhetoric. If Broadcom's earnings report meets expectations and non-farm payrolls exceed 100,000, the market is expected to continue its upward trend. Analysts point out that the current risk is tilted to the upside, believing that the macro environment is still in a "good news is good" state
According to the Zhitong Finance APP, JP Morgan analysts pointed out that there are currently two core data points supporting the stock market's upward movement: the upcoming earnings report from Broadcom (AVGO.US) and the U.S. non-farm employment data. Although analysts maintain a short-term bullish stance on U.S. stocks, they also emphasize that bullish confidence has weakened amid escalating trade war rhetoric and ongoing legal disputes over tariffs.
Corporate earnings performance remains strong, and macroeconomic data has yet to reflect the impact of tariffs and the trade war on the economy. Notably, the gains following Nvidia's (NVDA.US) earnings report have largely been reversed, while Broadcom's stock price rose 5.8% last week ahead of its earnings report scheduled for Thursday, with a cumulative increase of 25.8% in May.
Analysts stated: "If Broadcom's earnings report meets expectations and non-farm employment remains above 100,000, the market is likely to continue its upward trend, with the S&P 500 index (currently 3.9% below its historical high) potentially advancing to new highs."
They believe that if non-farm employment falls within the range of 75,000 to 80,000, it will be seen as a "yellow warning signal," while below 50,000 would be considered a "red warning signal."
"Nevertheless, we believe that any downward risks may only be seen in the data released on July 3rd at the earliest. The current risk is tilted towards the upside, as we believe the macro environment is still in a 'good news is good' state."
Analysts concluded, "Market positions show that investors are generally bearish, as they await an economic recession triggered by the trade war—but our strategy is more optimistic, as we see stronger economic resilience in the short term."
