JPMorgan Chase is warning investors that the US stock market might not be as safe as they think. The bank’s experts believe current market sentiment and economic data don’t support a strong and lasting stock market recovery.
JPMorgan’s Bearish Outlook
Mislav Matejka, JPMorgan’s head of global and European equity strategy, says investors are too optimistic about US stocks. He points to several factors:
- High Recession Risk: JPMorgan recently increased its prediction of a global recession from 40% to 60%, largely due to trade uncertainties.
- Overvalued Stocks: US stocks are currently expensive, trading at a high multiple of their projected earnings. This valuation doesn’t account for a potential recession.
- Fed’s Stance: The Federal Reserve’s likely decision to keep interest rates steady, even with rising inflation, is another concern.
Matejka emphasizes that unlike previous downturns, US stocks are no longer a reliable safe haven during a recession. He acknowledges that a recession might still be avoided, but current market optimism might be misplaced.
Paul Tudor Jones Agrees
Billionaire investor Paul Tudor Jones shares JPMorgan’s pessimism. In a recent interview, he warned that President Trump’s tariffs and the Fed’s policies could push the stock market to new lows, potentially below the 2025 low of 4,835 points. He cited several factors contributing to this prediction:
- Tariffs: Trump’s tariffs are hurting the economy.
- Interest Rates: The Fed’s reluctance to cut interest rates is adding to the pressure.
- Taxes: He also mentioned the significant tax increases as another negative factor.
Jones believes these factors will likely lead to new market lows before the situation improves and a potential market rally begins.
The Current Situation
As of Friday’s close, the S&P 500 was trading at 5,659. Both JPMorgan and Paul Tudor Jones are expressing significant concerns about the future direction of the US stock market. Investors should proceed with caution.
Disclaimer: This information is for general knowledge and does not constitute financial advice. Always conduct your own research before making investment decisions./p>