JPMorgan Foresees Choppy Waters Ahead for Stocks Due to Rate Hikes, Earnings Risks
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JPMorgan strategists expect stocks to soon have an unattractive risk-reward outlook due to high interest rates, lower earnings, threats to margins, and slowing growth.
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They say valuations look unattractive compared to Treasury yields, and technicals don't suggest a bullish trend.
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Any market bounce may be short-lived as a potential Fed policy mistake could lead to lower long-term yields.
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JPMorgan recommends defensive sectors like healthcare, utilities and staples that historically do well at end of rate hike cycles.
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They advise overweighting energy, insurance, telecom and underweighting banking, capital goods, chemicals, retail, and autos.