BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
Investing.com -- JPMorgan analysts see the next move for the S&P 500 as higher, despite the pullback in U.S. equities last week.
“The SPX fell 2.6% last week, trimming the MTD gain to 4.2% and pushing the YTD return back into negative territory, -1.3%,” JPMorgan said.
Despite this setback, the bank’s analysts argue the recent weakness represents a brief correction rather than a shift in direction.
“We had flagged pullback risk and believe that we experienced that last week,” JPMorgan said.
While the S&P 500 is still less than 6% below its all-time high, JPMorgan believes the “next 300 points” are more likely to be to the upside.
Their tactical bullish stance is based on three main drivers: “(i) stable macro data; (ii) positive earnings; and (iii) a further de-escalation of the trade war.”
Market volatility was elevated last week amid concerns about the U.S. fiscal outlook.
“While the 10Y yield only rose 3.4bps on the week, it traded in a 20bp range as the MOVE index increased 4.4%,“ JPMorgan wrote.
Meanwhile, international developed and emerging markets outperformed the U.S. last week, as the dollar continued to weaken, with the DXY falling another 2%.
JPMorgan highlighted that earnings from Nvidia (NASDAQ:NVDA) could serve as a key catalyst, especially as the U.S.-EU trade dynamic experienced both escalation and de-escalation over the weekend.