JPMorgan Warns: Stagflation Threatens U.S. Stock Rally

• JPMorgan Chase & Co. (JPM) strategists predict a potential “stagflationary episode” for the S&P 500 (SPX), citing higher prices, weaker U.S. economic growth, and ongoing trade tensions, despite its 6% gain in May, the best since 2023, per a Bloomberg report.
• While JPMorgan favors international stocks, particularly in emerging markets and Chinese technology due to stretched U.S. valuations, Goldman Sachs (GS) sees the S&P 500 trading near fair value with stable valuations expected over the next year.
• Morgan Stanley’s (MS) Michael Wilson remains bullish on U.S. corporate earnings, suggesting stock valuations have bottomed, highlighting divergent views amid concerns over global trade and the U.S. budget deficit.

The S&P 500’s (SPX) recent rally, which marked its strongest monthly performance since November 2023 with a 6% gain in May, faces headwinds from rising prices and weaker U.S. economic growth, according to a Bloomberg report citing JPMorgan Chase & Co. (JPM) strategists. Led by Mislav Matejka, the team warned of a potential “stagflationary episode” that could temper market gains in the coming months, driven by persistent trade uncertainties with major U.S. partners and a worsening tariff landscape compared to earlier expectations. Despite the S&P 500 being up 0.5% year-to-date, underperforming European and Asian markets, JPMorgan strategists advocate for international stocks, particularly in emerging markets and Chinese technology, citing stretched U.S. valuations.

In contrast, Goldman Sachs Group Inc. (GS) strategists, led by David Kostin, maintain a more neutral outlook, suggesting the S&P 500 is trading near fair value with stable valuations expected over the next 12 months. Meanwhile, Morgan Stanley’s (MS) Michael Wilson expressed optimism, pointing to robust U.S. corporate earnings and a belief that stock valuations have likely reached their nadir. The divergence in outlooks reflects the complex interplay of global trade tensions, a ballooning U.S. budget deficit, and varying expectations for economic resilience, with the S&P 500’s trajectory hinging on how these factors unfold.

WallStreetPit does not provide investment advice. All rights reserved.

• Bulenox: Get 83% OFF ... Use Discount Code: JJT3A
• Risk Our Money Not Yours | Get 50% to 90% OFF ... Use Discount Code: MMBVBKSM