JPMorgan strategists have issued a mid-year outlook, highlighting a challenging environment for continued stock market gains. Noting that the largest 20 U.S. stocks, up 27% year-to-date, have driven market performance, the firm cautions that this momentum is unlikely to be sustained.
The brokerage firm points to extreme levels in stock prices and anticipates downward revisions in earnings estimates due to higher interest expenses and a stronger U.S. dollar. With these top stocks accounting for 65% of the S&P 500’s gains over the past year, JPMorgan’s S&P 500 price target remains at 4,200, suggesting a 23% downside risk.
JPMorgan recommends diversifying portfolios into “anti-momentum Defensive Value plays” such as Utilities, Staples, Healthcare, and Telecom to hedge against potential market volatility and broader macroeconomic concerns.
