According to Zhithong Finance, JPMorgan's equity strategy team has turned bullish on US stocks. JPMorgan's Chief Global Equity Strategist Dubravko Lakos-Bujas expects a target of 6500 points for the s&p 500 by the end of 2025, exceeding the strategist consensus average of about 6300 points.

JPMorgan's new forecast implies that the index will rise approximately 8.35% from Wednesday's closing price of 5999 points. Lakos-Bujas's optimistic prediction is based on favorable factors such as a healthy US labor market, interest rate cuts, and a surge in capital expenditures in the competition for leading technology in ai.

Lakos-Bujas wrote in a report to clients on Wednesday: "Geopolitical uncertainty is increasing, and the evolving policy agenda brings unusual complexity to the outlook, but the opportunities may outweigh the risks."

Marko Kolanovic led the team for many years before leaving in early 2024; Kolanovic announced his departure from the team in July. He has been bearish on US stocks since the end of 2022. Under Kolanovic's leadership, the bank set a target for the s&p 500 index at 4200 points, which lasted nearly two years. Nevertheless, US stock indices broke this level in 2023 and climbed above 6000 points this year, prompting Wall Street peers to raise their outlook. Lakos-Bujas took over the company's market research this summer.

This view marks a stark contrast to the warnings issued by JPMorgan strategists for most of the past two years. As we enter 2024, the team warned that they expect an economic slowdown to pressure corporate earnings. They also indicated that overvaluation, crowded positions, and low volatility render the stock market "very fragile."

The reality, however, is the opposite; the s&p 500 index rose approximately 26% in 2024. With a strong economy, enthusiasm for ai, and monetary easing policies driving stock prices higher, the us stock market is expected to achieve its first consecutive two-year increase of over 20% this century. This shift in perspective has made jpmorgan no longer one of the few contrarian investment banks on wall street.

For the upcoming year, predictions from major banks and analysts are relatively optimistic and quite centralized: forecasts from goldman sachs, morgan stanley, and bank of america are around 6,600 points, while predictions from deutsche bank and yardeni research reach as high as 7,000 points.

However, this wave of optimism comes as the us stock market is at a crossroads, with the s&p 500 index's 12-month expected earnings pe exceeding 22 times, while the average pe over the past 10 years has been 18 times. There are also concerns that the policies promised by usa's president-elect trump, ranging from tariffs to mass worker expulsions, may reignite inflation, pushing bond yields higher and putting pressure on the stock market.

In the outlook report, lakos-bujas stated: "The timing, scope, and multiple impacts of policy actions and executive orders remain unknown factors affecting corporate profits. However, despite the potentially disruptive policies and the downside risks they may pose to the stock market, trump's attention to the market, the fed's interest rate cuts, and china's stimulus measures should provide support for the market."

In terms of other expectations for 2025, jpmorgan strategists indicated that trump's energy agenda brought downside risks to oil prices due to deregulation and increased us production; while stronger capital market activities may occur under a backdrop of low interest rates and more favorable regulatory conditions.

At the sector level, jpmorgan recommends increasing shareholding in financials, communications services, and utilities; reducing shareholding in energy and consumer discretionary; and maintaining neutral ratings on the remaining six sectors of the s&p 500 index. From a regional perspective, the bank favors us stocks over european and emerging market stocks and continues to increase shareholding in japanese stocks. The bank stated that japanese stocks will benefit from improvements in real wage growth, accelerated share buybacks, and ongoing corporate reforms.

Meanwhile, jpmorgan strategist mislav matejka also stated that unless geopolitical and trade policy risks diminish, the us stock market's dominance over the rest of the world is unlikely to weaken. Year to date, propelled by tech stocks and the ai boom, the us stock market has continued to outperform international markets, while the us economy remains resilient, and the fed has entered a rate-cutting cycle amid declining inflation.

Analysts like Matejka wrote: "The current situation of polarized performance in regional markets may continue, the pe in international markets does not seem high, and the usa market remains at a high level, but the relative spread may stay high for some time."

Editor/ping