JP Morgan, The rally in US stocks will continue

According to JP Morgan Chase & Co. strategists, there is no reason to fear that the rally that drove US stocks to hit a series of records last week will end by the end of this year. JPMorgan strategists said, "Given factors such as the current low investor position, record buybacks, limited systematic boosters and the positive January season, we can say that the conditions for a big sell-off in the market are not present." And they added, "Investors' positions are too pessimistic, the market has taken the hawkish Central Bank and the pessimistic Omicron scenarios too seriously." While the S&P 500 broke a new record last week, the stocks that caused the rise belonged to a narrow group of companies with large market shares, reminiscent of the bubble in technology stocks in the early 2000s. As the economic recovery after the pandemic-induced declines reaches its new peak, some fund managers have warned that the central banks and governments will halt quantitative easing to rein in inflation and the next phase of the cycle will be a correction. However, JP Morgan strategists think that "extreme share distribution and record concentration in certain stocks is a sign of being too careful, not an imminent selling wave." In their past client briefing, strategists stated that investors see mega-market stocks as safe havens, adding that as concerns about the normalization of inflation and the FED's faltering have subsided, withdrawals in smaller stocks are attractive to investors in "reopening stocks" in sectors such as travel, tourism, energy, and e-commerce. According to JP Morgan strategists, "Concentration in certain stocks is not a reliable indicator that the market is peaking."