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Jpmorgan Predicts a Terrible Year for the Stock Market

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According to JPMorgan Chase, the significant surge in the U.S. stock market during the previous month is probably going to fade by the end of the year due to several intensifying economic challenges.

In a recent analyst note, JPMorgan’s chief global equities strategist, Dubravko Lakos-Bujas, stated that a sharp fall in the S&P 500 during 2024 might be caused by slowing economic growth, the fast depletion of household savings, and persistent geopolitical unrest.

“Absent rapid Fed easing, we expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed,” Lakos-Bujas stated in the note.

The strategists at JPMorgan predict that by the end of 2024, the benchmark index may drop to 4,200, a decrease of around 8% from its present levels. Among the major Wall Street corporations, this is the most pessimistic assessment to date. Even the chief U.S. equity strategist at Morgan Stanley, Michael Wilson, a seasoned Wall Street bear, believes the S&P 500 will finish 2024 at 4,500.

“We expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed,” the note from JPMorgan added.

The poor forecast is the result of declining household savings, high borrowing prices that are almost at a record high, and a slowdown in global demand. Written by Lakos-Bujas.

“Absent significant monetary or fiscal policy supports, we see consensus growth assumptions at this point [as] more hope than realistic,” the economist stated in the note.

The dire prognosis follows a turbulent year in the stock market.

Fears that the Federal Reserve would raise interest rates more than anticipated and keep them at peak levels for a longer period of time caused all three indexes to collapse in the middle of 2023. However, they have swiftly recovered those losses, as evidenced by the S&P 500’s over 11% gain since its October end low.

The Dow Jones Industrial Average has increased by more than 36% since the beginning of the year, while the benchmark index has increased by about 20%. In the meantime, the tech-heavy Nasdaq Composite has increased by almost 36% as well.

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