Banking giant JPMorgan Chase says it is keeping an eye on two stock sectors that it believes will keep pushing the S&P 500 to new record levels.
In a recent episode of the bank’s Making Sense podcast, JPMorgan head of global market intelligence Andrew Tyler says he continues to be bullish on the stock market as both the macro and micro economic picture holds up amid the geopolitical tensions in the Middle East.
Specifically, he believes tech and financials will keep powering the market moving forward.
“So, I think from here, you really need to look towards the technology sector as well as the financial sector. And so, we’ve already seen the financial sector start to report, and this is the large banks, and they’ve all done very, very well. And the outlook there remains positive with corporate management pointing to, again, the health of the consumer, a healthy loan book, and then markets activity very strong on the go forward.”
Looking at tech, Tyler says the sector has become cheaper over the last few months as companies continue to report strong earnings.
“And when you think about valuation, think about this price earnings perspective, and it’s really the earnings, both realized and earnings expectations that continue to ramp higher, that make the segment look cheap, quote unquote. And so when we kind of think about this on a five-year look back, the sector is really trading almost one standard deviation below the mean. And one of the major drivers of both revenue and earnings continues to be AI.
And what we have seen from international earnings so far is robust global demand for AI that does not appear to have any end in sight.”
At time of writing, the S&P 500 (SPX) is trading at 7,135, down less than 1% from its all-time high, which it hit on April 27th.
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