GS and Citi Predict Lower Stock Returns, While JPMorgan Remains Optimistic
1min read Recently, Goldman Sachs strategists have warned that the S&P 500 could deliver an annualized return of only 3% going forward. Citigroup strategists also highlighted that exposure to the S&P 500 has reached levels that have historically been followed by a 10% decline. However, JPMorgan disagrees with this outlook.
Analysts from JPMorgan Chase's asset and wealth management divisions are more optimistic. They predict that U.S. large-cap stocks—the big companies that have driven much of the recent gains—will remain a core part of investors' portfolios and deliver an annualized return of 6.7% over the next 10 to 15 years.
Monica Issar, Global Head of Multi-Asset and Portfolio Solutions at JPMorgan Wealth Management, explained, "We've already factored in a contraction in U.S. stock valuations, but we believe that will be offset by stronger macroeconomic and corporate fundamentals over the next decade, providing a solid foundation for investors to allocate capital."
Part of JPMorgan's optimism comes from the expectation that artificial intelligence will lead to higher revenue growth and increased profit margins, especially for the large companies heavily investing in this technology.
I'm aware of the higher valuations, but I'm more confident in our projections than theirs over the next decade, said David Kelly, Chief Global Strategist at JPMorgan Asset Management. Overall, we believe American corporations are incredibly competitive—they know how to expand profit margins effectively.
