Wall Street divergence intensifies! JP Morgan continues to be bullish on US stocks, corporate profit growth will support the continued bull market.

Despite recent increased volatility in the US stock market and some Wall Street institutions issuing warnings of a market top, JPMorgan Asset Management remains optimistic about the future of the US stock market, believing that strong corporate profit growth will continue to support the market. Jack Caffrey, portfolio manager at JPMorgan Asset Management, said in an interview on Tuesday that the current upward trend in the US stock market is not being driven by liquidity or market sentiment, but by the continued improvement in corporate profit performance. "This is fundamentally a profit-driven story," Caffrey said. "I still have a constructive view on the US stock market." He expects that the momentum of US corporate profit growth will continue in the coming years. Following a double-digit growth in 2025, US corporate overall profits are expected to increase by more than 22% in 2026, and are also likely to maintain similar levels of growth in 2027. The recent trend in the US stock market has experienced significant fluctuations. Last Friday's release of US job data far exceeded market expectations, reinforcing bets on further interest rate hikes by the Federal Reserve this year, leading to sell-offs in tech stocks and artificial intelligence (AI) concept stocks. The Nasdaq 100 index recorded its largest single-day drop in 14 months. However, this week, with the AI sector receiving renewed investor interest, major US indices rebounded. Nasdaq 100 index futures, S&P 500 index futures, and Dow Jones Industrial Average index futures have all been trending upwards, indicating a recovery in market sentiment. Caffrey believes that short-term market fluctuations will not change the core logic of continued corporate profit growth. "If you ask me what will happen in the market in the next 15 minutes, I don't have a specific answer; but if you ask me about the next 15 to 24 months, I will still go back to the relationship between profit growth and market expectations." It is worth noting that Caffrey's optimistic view contrasts sharply with the cautious stance of some Wall Street institutions in recent times. A report from Bank of America recently warned that there are already "too many danger signals" in the market, with about 70% of bear market warning indicators being triggered, and advised investors to take profits appropriately. Meanwhile, strategists at Citigroup pointed out that institutional investors are actively building short positions on the US stock market, and though the near 5% drop in the Nasdaq 100 index last week helped alleviate some crowded trading risks, overall portfolio adjustments are still insufficient. In the face of concerns about overvaluation and overheated sentiment in the market, Caffrey admits that current investor sentiment has indeed heated up, but he believes that internal risk indicators in the market have not yet issued clear warnings. "Neither the VIX volatility index nor credit spreads currently show any signals of particular concern." Caffrey said that as long as corporate profit expectations continue to rise, the logic of a rise in the US stock market remains valid. However, he also warned investors that the market is unlikely to rise steadily in the future. With factors such as interest rates, inflation, and geopolitical issues continuing to impact the market, fluctuations in the stock market will inevitably occur during the rise. "There will definitely be situations of rebounds and corrections in the future," Caffrey said, "These corrections may be short-lived, but the amplitude of fluctuations will be quite significant." He believes that investors should not focus too much on short-term market noise, but should instead focus on the trend of corporate profit growth. For the future trend of the US stock market, what really determines market direction is still the fundamentals of companies, not short-term sentiment fluctuations. Against the backdrop of growing divergence in Wall Street's outlook for the future, JPMorgan Asset Management still believes that as long as US corporate profits maintain strong growth, the bull market in US stocks is likely to continue.