JPMorgan strikes bullish tones: Optimistic outlook for the US stock market

JPMorgan recently made a noteworthy reversal and is now optimistic about the US stock market. In its current outlook for 2025, the bank raised its 12-month price target by an impressive 55% compared to the previous target for the end of 2024. The new price target for the S&P 500 is 6,500 points, which corresponds to a potential increase of about 8%, having previously anticipated 4,200 points for the end of 2024. This optimistic assessment is backed by JPMorgan strategist Dubravko Lakos-Bujas, who points to the progress in the business cycle, the so-called US exceptionalism, and corporate earnings growth. These dynamics, together with the easing policies of global central banks and the decline in the Fed's strict monetary policy in the first quarter, support US stocks, in his opinion. This optimistic outlook signals a clear departure from the previously pessimistic stance, which was significantly shaped by former JPMorgan strategist Marko Kolanovic. Kolanovic, who left the bank in July, maintained optimistic forecasts during the 2022 bear market but took a negative direction when the bull market began in October 2022 and remained pessimistic until his departure, even though the S&P 500 gained 26% in 2023. For Lakos-Bujas, consumer purchasing power is a key factor for his optimistic scenario. He points out that US households benefit from a tight labor market, possess record wealth of about 165 trillion dollars, and could potentially benefit from future lower energy prices. Another aspect that could stimulate the stock market is Trump's recent electoral victory, which, according to the bank's assessment, is likely to support deregulated and business-friendly conditions, thereby promoting productivity increases and capital deployment. Also noteworthy are the unprecedented investments in the AI boom, which could sustainably drive the economy. According to Lakos-Bujas, total spending on AI should exceed one trillion dollars when comprehensively considering IT infrastructure, industrial research and development, and other operating costs. This development is expected to reach almost the volume of the US defense budget - around 850 billion dollars - within less than five years, indeed an astonishing prospect.