Background and Reasons for the Forecast Increase
JPMorgan recently raised its forecast for future market development, indicating increased confidence in the stability of the US stock markets. This decision occurred despite existing uncertainties in economic policy. Here are some key aspects that have influenced this development:
- Market Recovery: In May 2025, markets continued to recover from the lows of the previous month, April. This recovery was driven by improved consumer sentiment and decreasing trade tensions. Progress in trade negotiations between the US and the European Union (EU), as well as a temporary suspension of planned tariff increases, helped alleviate concerns about a global recession.
- Stock Market Performance: US stocks showed strong performance, particularly growth stocks, which rose by 8.7%, while value stocks increased by 3.2%. Small-cap stocks also experienced a robust recovery with a 5.9% rise.
- Forecast Adjustment: JPMorgan adjusted its forecast for the S&P 500. Initially, the forecast was lowered, only to be raised again. This indicates some uncertainty in market valuation but also a sustained confidence in US stock markets.
Uncertainties and Challenges
- Economic Policy Uncertainties: Despite the positive developments, uncertainties in economic policy still exist. These can impact market development and influence forecasts.
- Global Trade Tensions: Although trade tensions eased in May, they remain a potential risk for future market development.
- Interest Rate Environment: Changes in the interest rate environment can also affect market development and impair forecasts.
Conclusion
JPMorgan’s decision to raise the forecast for US stock markets reflects the continued confidence in the stability of these markets. Despite existing uncertainties in economic policy and global trade tensions, a positive market development is evident, supported by improved consumer sentiment and progress in trade negotiations.