JPMorgan said in a Sept. 6 Asia-Pacific thematic report that U.S. equities still have room to stay bid despite recent volatility in rates, currencies and oil prices. The bank pointed to four main supports: strong growth, yields that are not excessively high, a weaker-dollar bias, and hedge fund positioning that remains neutral to light.
In the report, JPMorgan argued that rising macro volatility has not materially reduced the appeal of equities. Global PMI data imply growth of more than 3%, EPS estimates are being revised higher, the MSCI World Index is up about 12% this year, and the 10-year U.S. Treasury yield has risen only 60 basis points. In the bank’s view, earnings growth is absorbing valuation pressure rather than a bubble driving the move. The report also mentioned potential risks tied to the German election and a shift in European trade policy, but said the main issues for U.S. equity investors remain growth resilience, the rate path and positioning.
Growth remains the first pillar of the bullish case
JPMorgan said growth is the primary reason to stay constructive on U.S. stocks. U.S. growth reached 2.5% in the first half of 2026, and the bank expects a stronger second half at 2.6%, with risks skewed to the upside. Global PMI readings for August also pointed to growth above 3% across multiple sectors and regions.
The bank said that even with oil near $100 and higher rates drawing attention, growth remains the central variable for equities. August nonfarm payrolls rose by 162,000, more than 100,000 above market consensus, while GDP and EPS forecasts are both moving higher. In JPMorgan’s reading, the labor data reinforced the resilience of the underlying economy and did not show the meaningful cooling that some investors had feared.
On earnings, the median S&P 500 company posted 14% year-over-year EPS growth in the second quarter. Excluding AI infrastructure companies, profit growth in other sectors also reached a cycle high. JPMorgan said the earnings recovery is spreading, giving U.S. stocks their strongest fundamental support. Share prices, in that framework, are being driven by profit growth rather than valuation excess.
Higher yields reflect growth and are not yet a cyclical drag
On rates, JPMorgan said the pace of the move matters more than the level itself. The recent rise in long-end yields has been driven mainly by stronger growth, not by runaway inflation or fiscal deterioration. The bank’s rates strategists expect the pace of the increase in the 10-year Treasury yield to slow, with a year-end target of 4.85%.
A regression analysis cited in the report showed that the current 10-year Treasury yield is broadly consistent with the level of potential growth. JPMorgan noted that while investors have focused on a 6% deficit ratio and $40 trillion in federal debt, the latest rise in yields is fundamentally growth-led. The bank treated that as a positive signal for equities rather than a warning sign. When yields rise on stronger growth, corporate pricing power and earnings prospects tend to improve at the same time, which helps preserve the appeal of stocks.
JPMorgan added that rates have not yet reached the point where they become a cyclical drag on the economy. Borrowing costs are higher, but stronger corporate earnings are still enough to offset that pressure. The threshold, the bank said, depends not only on the level of rates but also on the speed of the move, and the current pace remains manageable.
A weaker dollar would help multinational earnings
On foreign exchange, JPMorgan said that while the Trump administration officially maintains a strong-dollar stance, its policy preference in practice is to push rates lower and favor a weaker dollar to improve U.S. competitiveness.
The bank said that would support overseas revenue for U.S. technology companies and other multinationals. Roughly 50% to 60% of revenue for major U.S. tech firms comes from abroad. A weaker dollar would lift the translated value of those profits when converted back into dollars, directly supporting dollar-denominated EPS.
Neutral-to-light hedge fund exposure leaves room to add risk
JPMorgan also highlighted positioning as part of its constructive view. After two to three months of deleveraging, the bank’s U.S. tactical positioning monitor remains at a relatively low 40%, or negative 0.2 standard deviations. Global hedge fund net exposure stands at only 40% to 50% on a five-year view.
At the sector and style level, positioning in cyclicals relative to defensives is also neutral. The report said some early signs of re-risking appeared over the past week, but only in gross exposure, with net exposure not yet following. That setup, in JPMorgan’s view, means there is still meaningful buying power on the sidelines, and a wider return of capital to equities could follow if macro uncertainty fades.
Historically, when hedge fund net exposure has been in the 40% to 50% range, equity returns over the following six to 12 months have tended to be positive. Current positioning is neither crowded nor extreme, which the bank said offers a technical support for further upside in U.S. stocks.
September focus shifts to CPI
JPMorgan said the August payroll surprise, at 162,000, pushed September hike odds higher and weighed on equities, with the S&P 500 down 0.5%. The bank said Warsh has already made clear that there is no conflict in the dual mandate because the unemployment rate is already low. In its view, the real deciding factor for a September hike is the Sept. 11 CPI report.
JPMorgan expects core CPI to rise 0.21% month over month. If the data match that estimate, the probability of a rate increase in September should move lower. According to the report, market pricing for a September hike has climbed from about 30% before the payroll report to slightly above 50%.
If CPI shows moderate inflation, rate-hike expectations could cool quickly and open a rebound window for U.S. stocks. If CPI comes in above expectations, a September hike could become a live outcome and put short-term pressure on growth-stock valuations.
Allocation call and key risks
JPMorgan recommended maintaining an overweight on U.S. equities, AI technology and gold. The bank said AI infrastructure spending remains a core cycle theme. Capital spending by hyperscalers is expected to grow 60% in 2027, and while the growth rate is projected to slow in 2028, absolute spending should remain elevated.
The bank also listed several key meetings in September. It expects the Federal Open Market Committee to stay on hold on the 16th, the European Central Bank to raise rates by 25 basis points on the 10th, the Bank of England to stay on hold on the 17th, and the Bank of Japan to raise rates by 25 basis points on the 18th. For short-term market direction, JPMorgan said the Sept. 11 CPI print will be the more immediate guide.
On risks, the report highlighted two points. A hotter-than-expected CPI reading could pressure growth-stock valuations by reviving the case for a September hike. A more protectionist trade stance in Europe could also affect overseas revenue for some U.S. export-oriented companies, especially in the auto and industrial sectors. Even so, JPMorgan said the risk-reward profile for U.S. equities remains positive.
The article is a整理 and interpretation by Chaoxiang Research of a third-party broker report from JPMorgan dated Sept. 6, 2026, combined with public market information. Any ratings, target prices, earnings forecasts and related judgments cited in the piece reflect the views of the broker’s analysts and represent only the stance of their institution, not Chaoxiang Research, and do not constitute investment advice.
Markets carry risk, and investment decisions should be made independently. The article should not be used as the basis for buying or selling any security.