JPMorgan Chase & Co.’s equity strategy team, led for years by Marko Kolanovic until his departure earlier in 2024, has turned positive on US stocks.
Under Kolanovic, who had been bearish since late 2022 and whose exit JPMorgan announced in July, the bank kept its target for the S&P 500 Index pinned at 4,200 for almost two years. That was even as the US equities benchmark blew past that level in 2023 and climbed above 6,000 this year, and as Wall Street peers rushed to upgrade their outlooks.
Dubravko Lakos-Bujas, who took over market research for the firm this summer, on Wednesday released a year-end 2025 target of 6,500, which eclipses the average projection of about 6,300 among strategists tracked by Bloomberg.
JPMorgan’s new forecast implies an advance of roughly 8% from Tuesday’s close around 6,022. Lakos-Bujas based his bullish estimate on expectations for a healthy labor market, interest-rate cuts and a capital-expenditure boom in the race to capture the lead in artificial-intelligence technology, among other tailwinds.
“Heightened geopolitical uncertainty and the evolving policy agenda are introducing unusual complexity to the outlook, but opportunities are likely to outweigh risks,” Lakos-Bujas wrote Wednesday in a note to clients.
The view marks a notable reversal from the warnings coming from JPMorgan strategists for much of the past two years. Entering 2024, the group cautioned that they expected an economic slowdown would pressure corporate earnings. They also said that rich valuations, crowded positioning and low volatility made stocks “very vulnerable.”
Instead, the S&P 500 is up about 26% in 2024. It’s on track to deliver two consecutive years of gains eclipsing 20% for the first time this century as a strong economy, AI enthusiasm, and monetary easing propel share prices. The shift in views removes JPMorgan as one of few remaining contrarians on Wall Street.
For the year ahead, forecasts from major banks and analysts are bullish and clustered: Predictions from Goldman Sachs Group Inc., Morgan Stanley, and Bank of America Corp. fall around the 6,600 level, with estimates going as high as 7,000 from Deutsche Bank AG and Yardeni Research.
But the optimism comes with US stocks at a crossroads as the S&P 500 trades at more than 22 times projected 12-month earnings, compared with an average reading of 18 in the last decade. There’s also the worry that President-elect Donald Trump’s promised policies, from tariffs to the mass deportation of workers, could reignite inflation and push up bond yields, weighing on equities.
“The timing, scope, and multi-order effects of policy actions and executive orders remain considerable unknown levers for earnings,” Lakos-Bujas said in his outlook. But despite the risk of “extremely disruptive policies and the downside risk to equities they could pose,” Trump’s focus on markets, Federal Reserve rate cuts and stimulus efforts from China should place a floor under the market.
In other expectations for 2025, JPMorgan strategists say the Trump administration’s energy agenda presents downside risks to oil prices from deregulation and increased US production, while stronger capital-markets activity is likely on lower rates and a more favorable regulatory backdrop.
At the sector level, JPMorgan recommends being overweight financials, communications services and utilities; underweight energy and consumer discretionary; and neutral on the six remaining S&P 500 sectors.
From a regional standpoint, the bank prefers US equities over European and emerging-market stocks, and stays overweight Japanese equities, which it says stand to benefit from improving real wage growth, accelerating buybacks and continued corporate reforms.
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