JPMorgan Chase is sticking to its “lower conviction Tactical Bullish” market view, warning that enthusiasm for equities may face a setback even as bullish forces persist. The investment bank sees risk that the Federal Reserve’s anticipated 25-basis-point rate cut on September 17 could trigger a wave of profit-taking, potentially making the meeting a “Sell the News” event.
The U.S. stock markets surged on Monday as the Dow Jones Industrial Average (DJIA) gained 0.25% to 45,514.95. NASDAQ added 0.45% to 21,798.69, and S&P 500 expanded by 0.21% to 6,495.15. VIX decreased by 0.46% to 15.11.
Andrew Tyler, head of U.S. Market Intelligence at JPMorgan, highlighted in a recent note that while the bull market remains in force and leadership is rotating away from mega-cap names such as NVIDIA toward other tech heavyweights like Broadcom, several risks continue to loom. Investors, he suggests, may use the rate decision as a moment to reassess economic data, the Fed’s guidance, portfolio exposures, languishing corporate buybacks, and flagging involvement from retail participants.
While a renewed surge in artificial intelligence (AI) investment has bolstered sentiment, and recent economic indicators and earnings releases underscore stronger growth, JPMorgan warned that underlying vulnerabilities persist. The bank identifies inflation trends, labor market dynamics, and international trade as critical areas to monitor. Notably, if Thursday’s consumer price index surprises on the upside, JPMorgan still expects policymakers to move forward with the planned rate reduction.
The bank cautioned that looming tariff hikes threaten to inflate costs, although the eventual impact and scale are difficult to predict. Moreover, a drop in workforce participation, combined with labor market pressures heightened by easier monetary policy, could entrench higher wage inflation.
Given these uncertainties, JPMorgan recommends that while equity strategies remain unchanged, investors may benefit from upping gold allocations as rate cut expectations apply downward pressure on the U.S. dollar.
In related developments, Bank of America’s CFO Alastair Borthwick flagged that a sustained period of rate cuts could materially alter the bank’s net interest income profile over the next several months, signaling further financial sector sensitivity to the evolving rate environment.
