① JPMorgan strategists believe that despite the stock market being weak due to concerns over AI trading and uncertainty regarding the Federal Reserve’s interest rate cuts, now is the time for strategic stock accumulation; ② A robust outlook for the U.S. economy, sustained strong corporate earnings, waning tariff concerns, and an optimistic international market outlook are expected to drive the stock market through early next year.
Cailian Press, December 4 (Editor Huang Junzhi) As the year-end approaches, overall performance of the U.S. stock market has been lackluster due to investors’ concerns over artificial intelligence (AI) trading and the uncertain path of Federal Reserve interest rate cuts. However, according to JPMorgan strategists, this is precisely the time for investors to strategically increase their stock holdings.
Andrew Tyler and Federico Manicardi, two lead strategists from JPMorgan’s Market Intelligence division, stated that there are several key catalysts in the market that should propel the stock market higher through early next year.
The following are factors driving the development of the U.S. stock market:
Strong outlook for the U.S. economy. Despite signs of weakness in the labor market, the U.S. economy as a whole remains robust. Tyler noted that, from a debt perspective, the consumer sector, which accounts for two-thirds of GDP, appears to be in 'good health.' He added that at the same time, there is no indication that the softening labor market poses a 'significant risk' to the overall economy in the short term. According to the latest estimate from the Atlanta Federal Reserve Bank's GDPNow tool, the U.S. economy is projected to grow by 3.9% year-over-year in Q3.
Corporate earnings. Companies continue to report strong financial results, with 83% of S&P 500 companies that have released their Q3 earnings reports surpassing analysts’ expectations. The latest data from FactSet shows that the index is also on track to achieve its highest earnings growth in three years.
Tariff concerns are receding. The “Emancipation Day Tariffs” announced by U.S. President Trump in April this year did not cause the severe impact initially feared by the market. Tyler stated that the average effective tariff rate in the U.S. has steadily declined throughout the year, and this trend is expected to continue until 2026.
Strong prospects for international markets. Manicardi noted that the outlook for international stock markets next year is also very optimistic. For example, China’s economy appears to be in the 'early stages of recovery,' while economic activity across Europe is accelerating.
Tyler stated: 'We are tactically bullish and expect the stock market to continue rising into early 2026.' The team also mentioned that they favor a barbell-style investment portfolio.
A barbell-style investment portfolio refers to an investment approach where investors primarily divide their portfolio between high-risk assets and low-risk assets. The idea is that if one part of the portfolio underperforms, the other can provide downside protection, allowing investors to hedge risks while cashing out on high-return, more speculative investments.
JPMorgan also provided the following three major investment recommendations:
1. Artificial Intelligence Stocks
Tyler stated that on one side of the barbell, the bank favors large-cap technology stocks, particularly those related to artificial intelligence.
Despite slight fluctuations in November, artificial intelligence stocks remain the top-performing investment choice in the market for 2025. The Roundhill Magnificent Seven ETF, composed of seven giants in the AI sector, has risen by 23.7% this year.
2. Cyclical Stocks
On the other side of the barbell, the bank favors cyclical stocks, which tend to perform well during economic expansions. Tyler noted that this will allow investors to capitalize on the upcoming economic 'reboot.'
JPMorgan listed the following key sectors worth paying attention to:
Banks and financial stocks
Materials inventory
Energy stocks
Consumer stocks, such as retailers, airlines, and transportation
3. Key Sectors in the Global Equity Market
Manicardi highlighted potential opportunities in regions such as China, Europe, Japan, and India.
Below are the main international sectors that the bank is focusing on:
Banking stocks
Stocks related to 'electrification' themes such as energy and utilities
Healthcare stocks
Mining stocks
Luxury goods stocks
Renewable energy stocks
Editor/jayden
