Banking giant JPMorgan Chase says it is watching two stock sectors that it believes will continue to push the S&P 500 to new record levels.
In a recent episode of the bank’s Making Sense podcast, Andrew Tyler, JPMorgan’s head of global market intelligence, said say he remains bullish on the stock market as both the macro and microeconomic picture hold up amid geopolitical tensions in the Middle East.
In particular, he believes technology and financial services will continue to drive the market forward.
“So I think from now on you really have to look at both the technology sector and the financial sector. And so we’ve already seen the financial sector start to report, and these are the big banks, and they’ve all done very, very well. And the outlook there remains positive, with company management again pointing to consumer health, a healthy loan portfolio and then very strong market activity going forward.”
Looking at technology, Tyler says the sector has become cheaper in recent months as companies continue to report strong profits.
“And when you think about valuation, think about this price-earnings perspective. It’s actually the earnings, both realized and earnings expectations that continue to rise, that make the segment look cheap, without quotes. And so when we think about this five years from now, the industry is actually trading almost one standard deviation below average. And one of the key drivers of both revenue and earnings remains AI.”
And what we have seen from the international earnings figures so far is a robust global demand for AI that shows no sign of stopping.”
At the time of writing, the S&P 500 (SPX) is trading at 7,135, down less than 1% from its all-time high, which it reached on April 27.
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