JPMorgan analysts highlight two critical factors supporting the stock market's upward trajectory: Broadcom's (AVGO, Financial) upcoming earnings report and U.S. non-farm payroll data. While analysts maintain a short-term bullish stance on U.S. stocks, they caution that escalating trade war rhetoric and ongoing tariff-related legal disputes have tempered bullish sentiment.
Corporate earnings remain robust, and macroeconomic data have yet to show the impact of tariffs and trade tensions on the economy. Notably, Nvidia's (NVDA) post-earnings gains have mostly receded, but Broadcom's stock rose 5.8% last week, with a 25.8% increase in May. Analysts suggest that if Broadcom's earnings meet expectations and non-farm payrolls exceed 100,000, the market rally could continue, pushing the S&P 500 index closer to its historical high.
Analysts view non-farm payroll figures between 75,000 and 80,000 as a "yellow warning signal," while numbers below 50,000 are considered a "red warning signal." They believe downside risks may not materialize until data released in early July. Currently, they see risks skewed to the upside, as the macro environment remains in a "good news is good news" phase.
Market positioning shows a bearish bias among investors, who are anticipating a recession triggered by the trade war. However, analysts adopt a more optimistic strategy, citing stronger economic resilience in the short term.
