JP Morgan changes its stance to bullish on US stocks! Raises the S&P 500 year-end target to 6000 points, stating that there is still room for new highs in US stocks
JP Morgan's attitude towards the US stock market has changed 180 degrees, raising the S&P 500 year-end target from 5,200 points to 6,000 points, which is less than a 1% increase from Thursday's closing price. The bank's strategist Lakos-Bujas stated that as long as there are no major policy surprises, there is still room for new highs in the US stock market
Despite the ongoing uncertainty in trade policies, JP Morgan has turned bullish on U.S. stocks.
On Friday, June 6th, the latest news showed that JP Morgan raised its year-end target for the S&P 500 index. JP Morgan's Chief Equity Strategist Dubravko Lakos-Bujas originally predicted that the S&P 500 would close at 5,200 points by the end of this year, but he has now changed his stance. He believes the S&P could reach 6,000 points by year-end, which is less than 1% higher than Thursday's closing price, but significantly more optimistic compared to previous expectations.
In a report sent to clients on Thursday evening, Lakos-Bujas wrote, "As long as there are no major policy surprises, the most likely direction for the stock market is to continue reaching new highs."
JP Morgan is not the only institution to have made a 180-degree turn in its attitude towards U.S. stocks. Goldman Sachs, Deutsche Bank, and Barclays have also recently changed their stance to a bullish outlook on U.S. stocks.
Why are they suddenly optimistic?
JP Morgan's Global Market Strategy Chief believes that the main driving factors for the rise in U.S. stocks include the continued fermentation of the AI boom; systematic strategy funds (such as quantitative and CTA funds) continuing to buy due to decreased market volatility and strengthened momentum signals; and active funds taking advantage of the pullback to pick up bargains, leading to capital inflows.
Earlier in April, the chaotic trade policies of the Trump administration triggered panic in the market over the potential slowdown of the U.S. economy due to a trade war. Lakos-Bujas and many Wall Street strategists at that time lowered their expectations for the S&P 500 index, marking the most severe wave of downgrades since the pandemic began in 2020. Analysts believed that under Trump's unpredictable policy style, forecasting the market was very difficult.
Lakos-Bujas pointed out that a short squeeze-like rally may occur next, as institutional investors sold stocks to companies and retail investors during the panic in April, and are now realizing they sold too early and are chasing higher prices to cover their positions. He also believes that the rise in U.S. stocks will once again be led by large technology stocks. JP Morgan is particularly optimistic about momentum stocks, especially the seven tech giants, semiconductors, and other AI beneficiary companies.
However, Lakos-Bujas also warned that the U.S. economy may slow down in the second half of the year, and that current valuations of U.S. stocks are at high levels, necessitating caution regarding the risk of a pullback. Lakos-Bujas added:
"If an economic slowdown prompts the Federal Reserve to cut interest rates earlier, the market may 'ignore' weak data and instead speculate on a short-term rebound in small-cap and cyclical stocks."
