The higher the U.S. stock market climbs, the more apocalyptic JPMorgan Chase & Co.’s U.S. equity research team becomes, it seems.
After standing by their bearish view on the market all year, a team led by JPM Chief Global Markets Strategist Marko Kolanovic is warning clients that U.S. stocks could be headed for selloff due to some murky, unseen catalyst, according to a research note shared with MarketWatch on Thursday. The JPM note’s authors prefaced their warning with a detailed accounting of the mounting risks to a rally that has seen the S&P 500 climb more than 13% since the start of the year, and more than 22% from its Oct. 12 closing low, while the Nasdaq Composite has risen 30%, having erased the bulk of last year’s losses thanks to gains in a handful of megacap technology stocks like Nvidia Corp. NVDA and Microsoft Corp.
This means that instead of trailing big tech higher, these stocks could instead turn lower as the strength of the U.S. economy wanes and the Fed prepares to jack up borrowing costs with two more 25 basis point hikes this year, according to projections released by the central bank last week. “Absent pre-emptive Fed easing , we expect a more challenging macro backdrop for stocks in 2H with softening consumer trends at a time when equities have rerated sharply,” the team said.