Like a herald of apocalypse, JPMorgan Chase has warned its clients about a looming decline in the US stock market. The bank suggests that clients should revise their investment portfolios. After five months of a stunning rally on Wall Street, investors could encounter a headache.
Analysts at JPMorgan Chase foresee a downward correction in the short term. A large number of their investors bought shares of booming companies. Now clients could incur significant losses due to a coming bearish cycle.
The time is ripe to sum up the results of the first quarter which the US stock market closed with solid gains. The S&P 500 surged by 10% in the January – March quarter, extending a winning streak for 5 months in a row on the back of high corporate earnings and the hype about artificial intelligence. The rally on Wall Street was driven by the growing likelihood of rate cuts by the Federal Reserve. However, something went wrong.
JPMorgan explains to investors that all beneficial factors for stocks have been already priced in. The equity market has already allowed for high corporate revenues, expectations of the Fed’s rate cuts, and even the realistic win of Donald Trump in the presidential election. All these catalysts for the uptrend in stocks are already in the game. The bullish trend will be sustained by Nvidia and its AI innovations. However, analysts do not rule out negative news posing risks.
All in all, JPMorgan reminds its clients that a burst in demand for the stocks of the seven high-tech heavyweights will be inevitably followed by a correction. Looking back, this is exactly what happened after the global financial crisis. Hopefully, stock investors have learned their lesson.