JP Morgan: "Improved Conditions in U.S. Stock Market"... Favors Technology Stocks

Shifting From Caution to a Focus on Resilient Economy, Consumer Spending, and Earnings
Stabilizing Treasury Yields and Forecast for Lower Oil Prices

JP Morgan Chase's trading team has shifted away from its cautious stance on the U.S. stock market. This adjustment is based on stronger-than-expected economic activity and consumer spending, growing corporate earnings, and the view that Treasury yields could stabilize.

New York Stock Exchange. New York (USA) – Special Correspondent Yoonju Hwang

According to Bloomberg News on September 28 (local time), Andrew Tyler, Head of U.S. Market Intelligence at JP Morgan, stated in a client report, "While Treasury yields may find an appropriate level and oil prices may continue to fluctuate, they are likely to trend lower. As a result, market conditions have become more favorable."

Previously, after Federal Reserve Chair Kevin Warsh’s Jackson Hole speech at the end of August, expectations for rate hikes increased, leading Tyler to adopt a cautious view on the U.S. stock market. This time, however, he placed greater emphasis on the resilience of the economy and corporate earnings, which have exceeded expectations.

The first key test for the market is the U.S. employment report for September, set to be released this Friday. Economists estimate that after an unexpected gain of 162,000 new jobs in August, September will see an increase of 90,000. Following that, the Consumer Price Index (CPI) will be announced on October 14, and the Federal Reserve’s rate decision is scheduled for October 28.

Tyler expressed a preference for technology stocks in the short term. He predicted, "Earnings releases may provide additional support, so I currently favor technology stocks." He also projected that the rally in large-cap tech shares, including in the semiconductor sector, could broaden. On artificial intelligence (AI), he said, "The AI investment theme is likely to persist, and I prefer to hold assets related to it."

He also maintained a positive outlook on bank stocks, citing improving economic conditions, changes in the yield curve, and more favorable capital market conditions as reasons that could benefit the banking sector. However, he decided to abandon his previous strategy of combining buying in tech stocks with selling positions in the Russell 2000 index. This is due to the risk that a decline in oil prices or Treasury yields could cause small and mid-cap stocks to surge suddenly, potentially leading to losses on short positions.

This content was produced with the assistance of AI translation services.