JP Morgan remains bullish on US stocks despite some observers warning that the economy is beginning to pay for President Donald Trump’s tariffs.
The huge investment banking giant predicts the S&P 500, the Wall Street benchmark index, will deliver “single-digit high returns over the next 12 months,” driven by three key factors.
One of the main reasons for optimism is that markets do not care about signs of economic slowdown. Instead, traders focus on resilient corporate revenues and subsequent economic recovery.
Economists have downgraded their full-year US growth forecast from 2.3% to 1.5% since President Trump fired his first tariff Salvo on April 2. Still, the S&P 500 has surpassed 28% in four months. The index is stable despite recent economic data revealing softness in labor markets and consumption and stickiness in the manufacturing and services sectors inflation.
While the warnings from macro analysts are likely to be unfolding in the background, US corporate revenues ignore the risk of slowing, at least in the short term, making them the second catalyst for JP Morgan’s bullish paper.
Over 80% of S&P 500 companies have recently reported second-quarter revenue, with 82% exceeding revenue expectations and 79% exceeding revenue forecasts, making its first performance since the second quarter of 2021.
Winners and losers
According to JPMorgan, Wall Street analysts initially forecast revenue growth of less than 5%, but the index is paced at an impressive 11% growth rate. This robust presentation supports the ongoing bullish trend in the stock market.
“Expectations for revenue this year and next year for the full year are already beginning to rise,” a wealth management analyst at JPMorgan said in a market note on Friday, adding that the market is increasingly differentiating the winners and losers of the Trump trade war.
Additionally, the market is currently knowing and priced companies that are taking the most impact on US tariffs. So far, it seems that mega companies are fine. This could reinforce cases of further positive sentiment in the market.
JP Morgan analysts explained that consumer and small businesses are facing stagnant revenue outlook, curtailing trading partner partners and their negotiating power over strict supply chains.
This is tied to JPMorgan’s final catalyst. Trump’s tariff bark has proven worse than the bites of big companies that have even driven away tariff policies aimed at securing exemptions and causing a manufacturing boom.
“The latest example is President Donald Trump’s proposal that imported semiconductors will be taxed at a 100% rate unless companies promise to transfer production to the US. Another sign? Apple products are exempt from the latest tariff charges on Indian goods.
Large companies are gaining additional benefits from one big beautiful act (OBBA). Under that, companies can claim a bonus depreciation of 100% on the purchase of qualified business assets and immediate costs of domestic research and development costs. According to some analysts, depreciation policies could increase free cash flow for some people by more than 30% and could encourage more investments.
The bank added that its investment strategy focuses on large equities, particularly in its technology, finance and utility sectors.
Cryptographic angle
JPMorgan’s positive outlook on inventory could be modest for cryptocurrencies as both tend to move towards tandem. The digital asset market is doing a lot in itself, with the Trump administration appointing Crypto officials to key regulatory positions.
Recently, the US Securities and Exchange Commission (SEC) determined that under certain conditions, liquid staking is outside the scope of the securities law. The ruling raised hopes to staking spot ether ETFs that have been approved by the regulator.
Ether reached the level last seen in 2021, exceeding $4,200 by over 13%. Prices skyrocketed nearly 50% last month.
