JPMorgan Chase remains optimistic about the global stock market, believing that cyclical stocks will lead the way.

J.P. Morgan strategists remain optimistic about the global stock market and expect the upward trend in the second half of the year to expand. As corporate earnings and economic activity indicators improve, cyclical stocks are likely to regain the lead and outperform low-volatility stocks. The team led by Mislav Matejka wrote in a report that the index is expected to reach new highs in the second half of the year, noting that positions are far from extreme levels and that the second quarter earnings season is reassuring. Within the cyclical sectors, they are particularly focused on banks, luxury goods, building materials, mining, industrials, and cyclical consumer industries; they favor emerging markets and the Eurozone. The technology and semiconductor sectors may stabilize after a recent surge, but they will not lead the market rebound; they are also less favorable towards energy, consumer staples, software, and media sectors. Inflation risks are lower than in 2022, and a softening labor market will reduce the pressure on the Federal Reserve; a weaker dollar will support the stock market, especially international stocks.