JPMorgan: Stock Growth Will Continue Through Year-End

JPMorgan Chase & Co. maintains a positive stance on the stock market through year-end, though the bank does not expect broad-based, rapid growth. According to JPMorgan's assessment, further market gains will occur primarily through the reallocation of capital between sectors and companies — rotation — rather than broad-based appreciation.

The bank's strategist Fabio Basim stated that JPMorgan maintains a constructive position on equities through year-end and expects gradual growth driven by market rotation rather than broad-based sharp appreciation.

According to the bank's assessment, the recent recovery observed in the semiconductor sector indicates an improvement in investors' risk appetite. However, if the U.S. Federal Reserve System maintains patience regarding interest rates, lower volatility could become a more significant factor in market positioning and differential dynamics among individual companies.

JPMorgan particularly favors Quality Growth companies and major Cloud providers — hyperscalers. The semiconductor sector also remains attractive to the bank, particularly following the recent price revaluation.

In JPMorgan's view, if inflation reduction truly continues and the economy approaches the so-called "Goldilocks" scenario — where inflation declines but economic activity does not weaken significantly — equity growth could expand across a broader range of sectors.

Meanwhile, the bank draws attention to the rise in long-term bond yields and the steepening of interest rate curves in developed markets. One reason cited for this is the so-called "crowding out," where increased capital expenditures by technology giants, particularly in AI infrastructure, competes with massive bond issuances by governments for investors' capital.

However, JPMorgan believes that elevated long-term bond yields do not necessarily indicate an error in Federal Reserve policy. According to the bank's assessment, elevated yields could be more the result of increased demand for capital and new investment opportunities.

The bank also noted that the U.S. Treasury Department's increased buybacks of 10- and 30-year bonds indicate Washington's concern about rising long-term yields. Nevertheless, JPMorgan does not expect the Jackson Hole Symposium to fully resolve uncertainty regarding the Federal Reserve's future policy direction.