JP Morgan Private Bank is bullish on four US stock sectors as capital spending continues to trend.
Abigail Yoder, an equity strategist at the financial giant, says in a new analysis that the bank is positive on financial services, industry, information technology, utilities and energy infrastructure.
Yoder notes that financial services is in a good place to ride out market volatility.
“High quality large banks remain well positioned in the current interest rate environment, which we describe as ‘higher for longer but stable’. Net interest margins continue to benefit from higher interest rates and a steepening yield curve. Resilient credit fundamentals and strong capital positions support earnings sustainability and downside resilience.”
Turning to the industrial sector, Yoder says defense spending, infrastructure build-out, AI-related investments and reshoring initiatives are all driving structural demand.
“Money flows into a range of capital-intensive industries, from power equipment and construction to various types of advanced manufacturing. Together they illustrate the breadth and depth of the industrial cycle.”
The strategist notes that information technology has been the main driver of gains in the S&P 500.
“The recent valuation compression reflects macro volatility and not a deterioration in fundamentals. As we have discussed, we see good prospects for earnings in the technology sector, underscoring the sector’s role as a central pillar of growth and innovation in the US economy.”
Finally, Yoder says utilities and energy infrastructure are increasingly exposed to structural demand.
“Electrification, AI-driven energy consumption and grid modernization are putting a spotlight on the economy’s need for long-term energy investment and the sector’s strong earnings prospects.
Forecasters predict that electricity demand will exceed current generation capacity in the coming years… A continued imbalance between supply and demand will support companies’ pricing power. We believe it will also support a multi-year investment cycle in electricity generation, transmission and network infrastructure.”
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