JPMorgan Chase Issues Warning on Stock Market Recovery
JPMorgan Chase recently issued a market update, cautioning investors that sentiment and macroeconomic data do not support a sustained recovery for stocks. Mislav Matejka, the head of global and European equity strategy at JPMorgan, expressed concerns that investors may be overly optimistic about US equities despite looming recession risks and trade uncertainties.
Rising Global Recession Odds
Last month, JPMorgan raised the odds of a global recession from 40% to 60% due to President Trump’s ongoing trade war. Matejka emphasized that, unlike in the past, US stocks may not be a safe haven during an economic downturn. He warned, “The actual recession could still be avoided, but if one were to come through, the views by many that it is already in the price could prove to be too optimistic.”
Bearish Outlook on S&P 500
Matejka justified his bearish stance on the S&P 500 by highlighting the expensive valuation of US equities, trading at 21x forward earnings, coupled with overly optimistic growth expectations that do not account for a potential recession. He also cautioned that the Federal Reserve is likely to maintain interest rates amidst rising inflation expectations, despite signs of economic strain.
Echoes of Concern
Billionaire investor Paul Tudor Jones echoed JPMorgan’s cautious outlook in a recent CNBC interview. Jones warned that Trump’s tariffs and a hawkish Fed could push the stock market below its 2025 low of 4,835 points. He stated, “For me, it’s pretty clear. You have Trump who’s locked in on tariffs. You have the Fed who’s locked in on not cutting rates. That’s not good for the stock market.”
As of Friday’s close, the S&P 500 is trading at 5,659.
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