S&P 500 Likely To 'Test The 5,000 Level': JP Morgan On Where To Allocate In 2024
Portfolio Pulse from Surbhi Jain
JPMorgan Chase & Co (NYSE:JPM) predicts the S&P 500 will test the 5,000 level in 2024, recommending overweight positions in U.S. and Japanese equities, U.S. Treasury, and high-yield corporate debt. They suggest underweight positions in European equity and Emerging Markets (ex-China). JPMorgan expects U.S. equities to see broadened performance beyond tech, with an earnings growth estimate of 7% into the next year. They also see potential in Japanese stocks due to corporate governance reforms. In fixed-income, they recommend U.S. Treasuries and high-yield corporate debt, anticipating rate cuts in 2024. The US dollar is expected to weaken, and cash returns are set to fall.
December 18, 2023 | 7:28 pm
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NEGATIVE IMPACT
UUP, which tracks the US dollar, may face downward pressure as JPMorgan predicts a weakening dollar and rate cuts in 2024.
UUP's value is tied to the performance of the US dollar. JPMorgan's expectation of a weakening dollar and the possibility of rate cuts could negatively impact UUP's price in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
BIL may not see significant impact from JPMorgan's outlook as it tracks short-term Treasury bills, which are less sensitive to rate cut expectations.
Given that BIL tracks very short-term Treasury bills, the ETF may not be as affected by rate cut expectations as longer-term bond funds, leading to a neutral short-term impact.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 50
POSITIVE IMPACT
EWJ, which offers exposure to Japanese equity, could see a rise due to JPMorgan's recommendation and Japan's corporate governance reforms.
JPMorgan's overweight recommendation for Japanese equity and the potential for corporate governance reforms to drive stock performance could lead to a positive short-term impact on EWJ.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
EWU may see a positive impact due to JPMorgan's view of U.K. equity as cheap and supported by valuations and flows.
JPMorgan's positive stance on U.K. equity suggests that ETFs like EWU, which track U.K. stocks, may benefit from increased investor interest and potential appreciation in the short term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
HYG could see a positive impact from JPMorgan's overweight recommendation on high-yield corporate debt, with potential for spread tightening.
As HYG provides exposure to high-yield corporate bonds, JPMorgan's overweight recommendation and the potential for spread tightening could lead to a positive short-term impact on the ETF's price.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
IEF may see a positive impact from JPMorgan's overweight stance on U.S. Treasury, with potential rate cuts supporting this view.
IEF, which focuses on intermediate-term U.S. Treasury bonds, is likely to be positively impacted by JPMorgan's recommendation and the potential for rate cuts, leading to a favorable short-term price movement.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
IVV, which also tracks the S&P 500, may benefit from JPMorgan's forecast, potentially leading to increased demand and price growth.
Similar to SPY, IVV is an ETF that mirrors the S&P 500 index. Positive projections for the index suggest a similar positive impact on IVV's price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
JPMorgan's positive outlook on the S&P 500 and various asset classes may reflect confidence in their own advisory capabilities, potentially attracting investors to their services.
JPMorgan's analysis and recommendations can influence market sentiment and investor decisions, which could indirectly benefit JPMorgan's own stock as they are seen as a knowledgeable authority in financial markets.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
As JPMorgan predicts the S&P 500 to test the 5,000 level, ETFs like SPY that track the S&P 500 may see increased investor interest and potential price appreciation.
The SPY ETF directly tracks the performance of the S&P 500, so a bullish outlook for the index is likely to have a positive impact on the ETF's price in the short term.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
TLT could benefit from JPMorgan's overweight recommendation on U.S. Treasury, especially if rate cuts occur as anticipated.
As TLT is an ETF that tracks long-term U.S. Treasury bonds, JPMorgan's recommendation to overweight U.S. Treasury in anticipation of rate cuts could lead to increased demand and price appreciation for TLT in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
USHY may benefit from JPMorgan's overweight position on high-yield corporate debt, with supportive fundamentals and attractive carry.
JPMorgan's positive outlook on high-yield corporate debt suggests a favorable short-term impact for USHY, which tracks a broad range of U.S. high-yield corporate bonds.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
VOO, another S&P 500 tracking ETF, is likely to experience positive effects from JPMorgan's optimistic S&P 500 outlook.
VOO's performance is closely tied to the S&P 500, so a bullish market outlook from a major financial institution like JPMorgan could lead to a short-term positive impact on the ETF's price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90