JPMorgan Chase equity strategists continue to stand apart with a notably pessimistic outlook amid a wave of Wall Street strategists forecasting all-time highs for U.S. stocks in the coming year.
JPMorgan predicts the S&P 500 Index will decline to 4,200 by the end of 2024, indicating an approximately 8% drop from its current level.
Absent rapid Fed easing, analysts 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 analysts said in a note on Wednesday.
In addition to softening consumer trends, the strategists also listed decelerating global growth, shrinking liquidity, geopolitical and political risks, and elevated valuations as significant headwinds facing risk assets.
“Equities are now richly valued with volatility near the historical low, while geopolitical and political risks remain elevated. Analysts expect lackluster global earnings growth with downside for equities from current levels,” they added.
“For S&P 500, analysts estimate earnings growth of 2-3% next year with EPS of $225.”
Along these lines, JPMorgan continues to recommend a more defensive stance within styles and sectors due to potential downside risks to corporate profits.
“While it is difficult to pin down the start date and depth of a recession ahead of time, analysts think it is a live risk for next year even though investors are not pricing in this uncertainty consistently across geographies, styles, and sectors yet,” the strategists concluded.