JP Morgan "empty multiple" short-term bullish on US stocks but warns of "honeymoon period" only lasting a few weeks.

The J.P. Morgan trading team recently shifted tactically to a bullish view on US stocks, believing that positive factors such as the earnings reports of tech giants and progress in trade agreements will continue to drive the recent rebound of US stocks. However, the bank quickly emphasized in a report to clients on Monday that this momentum may fade in the coming weeks, and the negative impact of US tariff hikes will begin to weigh on the economy in the months ahead. Andrew Tyler, Global Market Intelligence Director, wrote in the report, "Overall, there is still room for the market to continue to soften in the easing trade tension situation." However, he added that this does not mean that all market alarms have been fully lifted. On Monday, US stocks fluctuated, with the S&P 500 index falling by up to 1% at one point, and the tech-heavy Nasdaq 100 index dropping by 1.4%. The previous week, as President Trump boasted progress in trade negotiations, US stocks achieved their second largest weekly gain in 2025. The Tyler team, who previously held a "tactically bearish" stance, pointed out that their latest forecast is different from their previous bullish views, mainly based on technical factors rather than purely fundamental analysis. They wrote, "Light positions, low liquidity, and low investor participation mean that as long as there are no negative news such as tariff escalation or a surge in bond yields, the market is likely to continue to rise mildly." They added that the possibility of reaching a trade agreement also makes the risk-return ratio more favorable. The Tyler team also expects that the strong earnings reports from large tech companies could act as a catalyst for the stock market. This week will test this expectation as Microsoft Corporation (MSFT.US), Apple Inc. (AAPL.US), Meta (META.US), and Amazon.com, Inc. (AMZN.US), among the "big seven," will all announce their results. Despite escalating trade tensions, the group including Alphabet Inc. Class C (GOOGL.US), Tesla, Inc. (TSLA.US), and NVIDIA Corporation (NVDA.US), among others, is expected to maintain an average profit growth rate of 15% for 2025, similar to the early March forecasts. However, Tyler warned, "The negative impact of the trade war on the real economy will take 1-2 months to materialize." This is in line with the views of forecasters from major Wall Street institutions, who generally expect US economic data to deteriorate. The next major test for traders will be the nonfarm payroll data released on Friday. In addition, the stock research team at J.P. Morgan, led by Fabio Bassi and Dubravko Lakos-Bujas, believes that the S&P 500 index will fluctuate in the range of 5200 to 5800 points, with the trend being influenced by both trade positives and recession concerns. The team stated, "We lean towards reducing risk assets during strength rather than chasing them, as more clear signals are needed for the market narrative to truly shift."