JPMorgan Chase Predicts U.S. Stocks Rally on Tech Earnings, Trade Deals

JPMorgan Chase's trading division has adopted a tactical bullish stance on U.S. equities, predicting that recent declines will be offset by positive factors such as strong earnings from major technology companies and the announcement of trade agreements. This optimistic outlook is based on the expectation that these favorable developments will continue to boost the stock market.

However, the firm cautioned in a report issued to clients on Monday that the upward momentum may not be sustainable. The report highlighted that while current conditions are supportive of a short-term rally, the underlying economic and market fundamentals may limit the duration and magnitude of this rebound. The firm's analysts emphasized the need for investors to remain vigilant and prepared for potential volatility, as the market's recovery could be fragile and subject to various external influences.

Andrew Tyler, the global market intelligence chief, wrote, "Overall, the easing of tensions in trading still has room to rise." However, he also noted, "This does not mean that the market has completely eliminated risks."

U.S. stocks declined on Monday, with the S&P 500 index falling 1% during midday trading and the Nasdaq 100 index dropping 1.4%. The previous week, U.S. stocks recorded their second-best weekly performance since 2025, following President Trump's announcement of progress in trade negotiations.

Tyler's team, which previously held a tactical bearish view on U.S. equities, stated that their latest prediction differs from their past bullish outlook. This new stance is largely based on technical factors rather than fundamental analysis. They explained, "Current positions are light, liquidity is low, and investor participation is limited. All of this suggests that the stock market could rise in the absence of negative news such as tariff developments or a surge in bond yields."

They also noted that the potential announcement of a trade agreement further tilts the risk-reward mechanism in a positive direction. Tyler's team anticipates that earnings from large-cap technology companies will be a potential catalyst for the stock market. This belief will be tested this week as Microsoft, Apple, Meta Platforms Inc., and Amazon, four of the "seven giants" in the tech sector, are set to release their earnings reports.

Tyler warned, "There is still 1-2 months before we see the negative impact of the trade war on the real economy." This aligns with the views of major Wall Street firms that predict a deterioration in U.S. economic data. The next significant test for traders will be the non-farm payroll data scheduled for release on Friday.

Additionally, Fabio Bassi and Dubravko Lakos-Bujas, strategists from JPMorgan Chase's equity research team, forecast that the S&P 500 index will fluctuate between 5,200 and 5,800 points. They noted that progress in trade negotiations and concerns about an economic recession will have a significant impact on market movements.