JPMorgan, at Odds With Goldman, Sees Solid Run Ahead for Stocks

The diverging forecasts signal the broader uncertainty that’s hovering over Wall Street even after the Federal Reserve’s long-awaited pivot last month toward easing monetary policy.

That’s in part because of how much stocks have already rallied the past two years thanks to the resilient economy, strong corporate profits and speculation about artificial intelligence breakthroughs — sending the S&P 500 to a 22% gain this year. It’s up more than 60% since bottoming out in October 2022.

Goldman Sachs declined to comment further.

The strategists at JPMorgan’s asset and wealth-management arms expect U.S. stocks to trounce cash and deliver solid post-inflation returns, according to a report looking ahead to the state of capital markets in 2025.

In contrast, Goldman says there’s a roughly 72% chance the asset class will trail bonds and a one-third chance equity returns will lag inflation through 2034.

Part of the JPMorgan team’s optimism stems from anticipation that artificial intelligence will pay off by delivering higher revenue growth and fatten profit margins, especially for the big companies that are investing heavily in the technology.

“I am very conscious of higher valuations, I feel more confident in our numbers than theirs over the next decade,” said David Kelly, chief global strategist at JPMorgan Asset Management. He attributed poor performance in the first decade of the 2000s to the global financial crisis and acknowledged the possibility of unknown shocks.

“But overall, we think that American corporations are extreme — they’ve got sharp elbows and they are very good at growing margins,” according to Kelly.

(Credit: Bloomberg)