JPMorgan remains bullish on US stocks, even when some observers warn that the economy is starting to pay the price of President Donald Trump’s customs.
The investment bank giant predicts that the S&P 500, the Wall Street’s Benchmark Index, will yield a “high single -digit return over the next 12 months”, powered by three key factors.
One of the main reasons for optimism is that the markets are not interested in signs of an economic downturn. Instead, traders are focused on resilient business earnings and the subsequent economic recovery.
Since President Trump fired the first duty Salvo on April 2, economists have downgraded year -round US growth forecasts from 2.3% to 1.5%. Still, the S&P 500 has achieved over 28% in the four months. The index has kept stable despite recent financial data that reveals softness in the labor market and consumption, as well as stickiness in manufacturing and service sector inflation.
While the macro -analysts’ warning relates and probably plays in the background, the company’s earnings in the United States ignore the relief risks, at least in the short term, making it the other catalyst for JPMorgan’s Bullish thesis.
Over 80% of the S&P 500 companies have recently reported their Q2 earnings, with 82% exceeding earnings expectations and 79% to beat revenue forecasts -the strongest performance since the second quarter of 2021.
The winners and losers
According to JPMorgan, while Wall Street analysts initially projected earnings growth below 5%, the index is now at the pace of impressive growth of 11%. This robust view supports the ongoing bullish trend in the stock market.
“Expectations for the whole year for both this year and next year have already begun to get higher,” said analysts at JPMorgan’s Wealth Management in a market note on Friday, adding that the market is increasingly different between the winners and the losers of the Trump trading war.
In addition, the market is now finding out and prices where companies are most affected by US tariffs. So far, it seems that mega companies will be just fine. This could strengthen the case for further positive mood in the markets.
JPMorgan analysts explained that consumer-facing and smaller companies with restrained negotiating power against their trading partners and stiff supply chains are facing a stagnant earnings prospect.
This binds to JPMorgan’s last catalyst: Trump’s Customs Bark turns out worse than its bite for large companies that manage to secure exceptions and even transform customs policy aimed at triggering a production boom into a wind.
“The latest example is President Donald Trump’s proposal that imported semiconductors would be taxed at a 100% rate unless companies commit to moving production to the United States. Another sign? Apple products are exempt from the latest tariffs on Indian goods. In fact, the company also happens with another $ 100 billion.
Large companies get a further benefit from the one big beautiful action (OBBA)Under which companies may require 100% bonus depreciation for the purchase of qualified business property and immediate cost of domestic research and development costs. According to some analysts, depreciation policy could increase the free cash flow for some by over 30%, which could incentive more investments.
The bank added that its investment strategy remains focused on large CAP shares, especially in technology, economic and supply sectors, which it believes is best placed to navigate this new economic environment.
The Crypto angle
JPMorgan’s positive prospects for stocks could bode well for cryptocurrencies as both tend to move in tandem. The market for digital assets has plenty is taking place for themselves, with the Trump administration appointing pro-crrypto-officials for key regulatory positions.
Recently (SEK) steered that under certain conditions, floating stacking falls outside the securities legislation. The ruling has raised hope of putting place ETER ETFs winning regulatory approval.
Ether has collected over 13% for over $ 4,200 and reached levels last seen in 2021. Prices rose nearly 50% last month, Coindesk data shows.
