JPMorgan Traders Turn Bullish on U.S. Stocks After Strong Weekly Performance

JPMorgan Chase traders have recently shifted their stance on U.S. stocks, turning bullish following the market's strong performance last week. This marked the second-best weekly performance of the year. However, the firm cautions that this upward trend may dissipate within a few weeks.

On April 28, JPMorgan's trading team sent a report to clients, abandoning its previous "tactical bearish" stance and adopting a more optimistic view of the U.S. stock market. Andrew Tyler, the global head of market intelligence at JPMorgan, stated that "overall, with the easing of trade tensions, U.S. stocks still have room to rise."

Tyler also predicted that the upcoming earnings reports from tech giants this week could further boost the market. Beyond the potential benefits from tariff negotiations and tech earnings, Tyler's team noted that technical factors also influenced their change in stance. The report highlighted that a combination of low positioning, low liquidity, and low investor participation suggests that the market could continue to rise in the absence of negative tariff news or a surge in bond yields.

However, JPMorgan's trading team also warned that this rebound could weaken within a few weeks, as the negative impact of U.S. tariffs is expected to start dragging on the economy in the coming months. Just a week ago, Tyler and his team were still bearish on U.S. stocks, advising a tactical short position. The recent strong performance of U.S. stocks, with all three major indices rising for four consecutive weeks, has been attributed to positive signals from tariff negotiations, which have boosted market sentiment.

The team at JPMorgan anticipates that earnings reports from major tech companies could be a significant driver for the market. This week, key tech giants such as Microsoft, Apple, Meta, and Amazon are set to release their earnings. The team expects the Mag 7 to achieve an average profit growth of 15% in 2025, a projection that has remained largely unchanged since early March despite escalating trade tensions.

Tyler's team also cautioned that the negative impact of the trade war on the economy may not be fully visible for another 1-2 months. This aligns with broader concerns on Wall Street about potential deterioration in U.S. economic data. The team advised investors to be cautious, noting that the current market rally could fade within a few weeks due to the looming economic risks posed by tariffs.

Additionally, JPMorgan's equity research team forecasts that the S&P 500 index will fluctuate between 5200 and 5800 points, influenced by both positive trade news and recession fears. They recommend selling risk assets during market strength rather than chasing the momentum, as a complete narrative shift requires more clear signals.