J.P. Morgan becomes the “flag bearer of the bull market”: S&P 500 is about to reach a new high, short-term pullback, the risk is manageable, and it is difficult to revise for the second time

The Zhitong Finance App learned that the trading business department of Wall Street financial giant J.P. Morgan Chase is firmly bullish on US stocks, stressing that it is unlikely that the US stock benchmark index, the S&P 500 index, will experience a new round of drastic downward correction of the adjustment trend. However, the risk of the S&P 500 index pulling back under the negative impetus of the incident where Moody's downgraded the US credit rating is rising, but the pullback will be very narrow, and in recent years, J.P. Morgan Chase, which has continued to maintain a cautious stance on US stocks, expects the index to reach a record high and officially join Goldman Sachs to lead the Huayer The street's “bull market standard-bearer” procession.

“The S&P 500 has broken through 5,900 points. This level is seen as both a resistance level and a milestone for 'high buying' to return to the US stock market.” Market intelligence experts from J.P. Morgan's trading department wrote in a research report on Monday.

“Next stop? 6,144 points is the highest closing point in history, a difference of only 3.1% from last Friday's closing point. We remain tactically bullish and expect the S&P 500 to break through its all-time high.” Experts at J.P. Morgan Chase also pointed out that the risk of a short-term decline in the S&P 500 index is rising, but “the possibility of another downward correction and adjustment of the market is very low.”

What factors could trigger an extremely limited short-term pullback? Market intelligence experts at J.P. Morgan gave the following clues:

The “AI chip hegemon” Nvidia (NVDA.US)'s performance fell far short of expectations. “Since the low on April 8, the S&P 500 index has risen sharply by 19.6% into a bull market, with “Mag7” (the seven major US tech giants) contributing 30.5% to the increase... Given that chip purchases are an important outcome of the Trump administration's trade negotiations, the risk/return of this financial data tends to be positive, but if the performance guidance falls short of market expectations, it may cause the seven major tech giants with high weight to collectively fall back, which in turn affects the entire US stock market.” J.P. Morgan said.

Trade negotiations have been blocked or the Sino-US trade agreement has had another “negative impact.” “In view of the positive effects of the Sino-US trade negotiations, the 10% tariff seems to be the new benchmark.”

Negative factors associated with positions. “Our market strategy team has noticed a slowdown in retail buying power, macro-hedge fund short recovery has basically been completed, and overseas investors have yet to significantly buy US stocks. Overall, although the current position level is not enough to resist the upward trend in the stock market, it may no longer provide important support for the continued rise.”

Another Wall Street financial giant, Morgan Stanley, said that investors should buy any US stock that fell due to the US government's credit rating downgrade last Friday, because the temporary truce in trade between the US and China reduced the possibility of a recession in the US economy. Morgan Stanley said that the stock market is more likely to recover after Moody's downgrade credit ratings caused 10-year US Treasury yields to rise above the 4.5% mark; however, the team led by senior Morgan Stanley strategist Michael Wilson wrote in the report: “When the stock market pulls back, we will choose a dips buying strategy.”

The Morgan Stanley Strategy Team, led by Wilson, warned in March that sharp fluctuations in the US stock market would continue until the second half of this year. However, the strategist is now one of the few Wall Street voices that are optimistic about US stocks rather than international stock markets.