JPMorgan’s trading desk has dropped its tactical neutral stance on U.S. equities and turned bullish again ahead of the September U.S. nonfarm payrolls report. Andrew Tyler, the bank’s head of U.S. market intelligence, said stronger-than-expected economic activity, resilient consumers, steady earnings growth, and the possibility of stabilizing bond yields have created a more supportive setup for risk assets. Within equities, Tyler said technology remains the bank’s main bullish call, with semiconductors and the “Magnificent Seven” still seen as likely outperformers, while the artificial intelligence theme is not over. In cyclical sectors, JPMorgan prefers banks, citing reaccelerating growth, a potentially steeper yield curve, and improving capital markets activity. The bank also said it no longer recommends using Russell 2000 shorts as a direct hedge against long tech positions, arguing that lower oil prices and easing bond yields could force short covering in small caps. Markets are now focused on Friday’s U.S. September jobs report. A Bloomberg survey forecasts about 90,000 new nonfarm jobs and an unemployment rate near 4.1%, while fed funds futures imply roughly a 65% chance of another Federal Reserve rate hike in October.
JPMorgan’s trading desk has ended its earlier tactical neutral stance on U.S. equities and turned bullish again ahead of the September U.S. nonfarm payrolls report, with technology and banks now at the center of its positioning.
Andrew Tyler, JPMorgan’s head of U.S. market intelligence, said stronger-than-expected U.S. economic activity, resilient consumers, solid corporate earnings growth, and the prospect of gradually stabilizing bond yields have made the current backdrop more supportive for risk assets.
Technology remains the main bullish call
Tyler said technology is still the firm’s primary overweight view. He added that semiconductors and the “Magnificent Seven” could continue to outperform, and said the artificial intelligence theme has not run its course.
Banks preferred within cyclical stocks
Within cyclical shares, JPMorgan said it prefers banks. The bank’s view is based on reaccelerating economic growth, the possibility of a steeper yield curve, and improving capital markets activity, all of which it sees as supportive for the sector.
Hedge view shifts before Friday jobs data
JPMorgan also said it no longer recommends using shorts on the Russell 2000 Index as a direct hedge for long technology exposure. The bank said potential declines in oil prices and bond yields could create short-covering risk in small caps.
The next focal point for markets is Friday’s U.S. September nonfarm payrolls report. A Bloomberg survey expects around 90,000 jobs to be added, with the unemployment rate holding near 4.1%. Fed funds futures currently show the market assigning about a 65% probability to another Federal Reserve rate hike in October.
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