The rally in U.S. stocks is likely to continue in this year’s second half, fueled by several bullish catalysts, say analysts at JPMorgan Chase’s (JPM) asset management unit.
As we near the halfway mark of 2024, the benchmark S&P 500 index has gained 15% on the year. The technology laden Nasdaq index is up 20% and the blue-chip Dow Jones Industrial Average has risen 3%.
While the S&P 500 and Nasdaq are each currently at all-time highs, analysts at JPMorgan say they expect the outperformance to continue through year’s end.
Moving through the summer and into fall, stocks are likely to continue benefitting from strong corporate earnings, a resilient U.S. economy, and at least one interest rate cut from the Federal Reserve, say the strategists in a mid-year report on the state of equities.
“Healthy earnings growth and wide valuation dispersion suggest the environment remains positive for equity performance…” writes David Kelly, JPMorgan Asset Management’s chief global strategist.
Investor sentiment remains largely positive, fueled by optimism for lower interest rates and enthusiasm for artificial intelligence (A.I.) technologies that’s driven stocks such as Nvidia (NVDA) to outsized gains.
Kelly points out that every S&P 500 sector other than real estate is higher year-to-date, suggesting the rally in stocks is broadening out. At the mid-point of 2023, only five of the S&P 500’s 11 sectors were higher.
Risks to JPMorgan’s outlook include a potential bubble forming in artificial intelligence stocks and slowing economic growth, which could hurt corporate earnings.
The stock of JPMorgan Chase has increased 37% in the last 12 months and currently trades at $193.66 U.S. per share.
