JPMorgan Asset Management foresees stock rally continuing in H2

JPMorgan Asset Management's outlook for the second half of 2024 forecasts a broadening market rally (^DJI, ^IXIC, ^GSPC) to expand past the tech sector and its standouts, namely the Magnificent Seven. Yahoo Finance Markets Reporter Josh Schafer breaks down JPMorgan's expectations for earnings in 2024's latter half.

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This post was written by Luke Carberry Mogan.

Video transcript

The stock market rally has once again become tech centric.

But strategists believe this could change in the second half of the year here with more Yahoo finance's Josh Schafer.

So the broadening another call for broadening another call for broadening.

So it is about the middle of June, which means it's time for a lot of strategy teams to come out with their second half of the year outlook, right?

So I've attended two of these so far this week, one was with T Rowe price and Charles Schwab today was JP Morgan asset management and one theme emerged in both of those and its the theme.

We heard a lot in people's 2024 outlooks, which is there's going to be a broadening of the stock market rally.

We're not going to be talking about just the mag seven.

And I think notably right now is this is coming at a time where we've really shifted back to that mag seven rally.

And here's sort of the main base case.

People are pointing out this is earnings estimates for the rest of the year you can see in purple, it's magnificent seven in white blue.

It's your other 493 the key Josh is sort of the end there when we get to 17% and 17% converging.

Right.

So what you're seeing is earnings declining for mag seven earnings coming up for the other 493.

Now, I asked Gabrielle Santos today at the JP Morgan Asset Management conference.

Ok.

I've seen this graph before.

We, we've talked about this graph before.

When does it start getting priced in?

And is it priced in?

And she said she thinks we're already part of the way there?

I mean, you look at utilities, for instance, the rally that we saw, it's up 9% on the year.

It's not outperforming the S and P 500 but you're starting to get a bid and she thinks really what you need now is probably just these earnings to actually come through in the second quarter.

Like yes, we're looking at estimates and estimates are supposed to grow and we're supposed to catch up.

But in the first quarter, it wasn't fully there.

It kind of depends on what sector you look at, not to mention tech did better than people even thought.

So, is that gonna start to happen a little bit more in second quarter earnings season, I think is gonna be a big topic of conversation over the next month as we lead into it.

And one other thing they highlighted that was interesting because I know you guys had a conversation recently with Michael Kantrowitz about a, a two way football player and sort of defense and offense, right, playing both sides of the ball, like you probably did Josh.

Totally.

Absolutely.

Just bring it right back to high school.

And so Kowitz had mentioned utilities, right?

And he said utilities can be defensive, but they also have an A I play J PM today was mentioning health care and sort of the hype trade themes that you can get in health care right now with G LP ones.

People also think A I is gonna help them.

And then there's perhaps maybe a defensive aspect to that as well, sort of two sided there, which I thought was kind of interesting.

No Iron Man maybe.

Yeah.

No, we're gonna, everyone's gonna be an Ironman football player all of a sudden and then people get tired and then that's not, can I, can I get one last question because you're in this room with these very smart important people just very quickly, I mean, what was their take on the economy?

Is this kind of a soft landing camp crowd stuff?

Yeah, it was interesting.

Their chief global strategist David Kelly kept talking about the fact that we're currently in position for a soft landing which whenever someone sort of keeps hammering that point, it stands out to me, given the recent data.

He said what we saw from the inflation prints over the last two days was really just a more extreme version of the trend we've been seeing rent has been coming down, right?

But for rent and CP I to come down as much as it did and for auto insurance to come down as much as it did is perhaps just a preview for the rest of 24.

And they think the economy can overall hold up with inflation coming down and we're still on that narrow path for the soft land.

All right, smart group of folks.

Thank you Joshua.

Appreciate it.