S&P 500 could fall roughly 20% before year-end, JPMorgan market analyst warns

A leading market analyst at JPMorgan has warned that the S&P will likely fall by about 20 percent before the end of the year.

Marko Kolanovic of JPMorgan underlined this in a note he published on Monday.

In the note, Kolanovic urged investors not to view the market as bullish even though the Dow Jones appeared to be performing well. Why not? Because one, interest rates are likely to remain high for now, and second, because lower-tier consumers have also shown signs of weakness.

“With very high equity valuations, we do not view the stock as an attractive investment at this time and see no reason to change our position,” he wrote, he said. Insider.

$SPY JPMorgan Chase & Co.'s Marko Kolanovic is the only remaining bear, and even then, he's only calling for a return to last October's levels. Everyone is bullish…we'll see how this plays out in 6 months pic.twitter.com/w6KrN7Af6H

— Vince Stanzione (@Vince_Stanzione) May 23, 2024

That said, Kolanovic is the last major bearer left in the market as other forecasters have turned bullish, including Morgan Stanley's Mike Wilson.

“In the case of Morgan Stanley CIO Mike Wilson, it was continued strength in corporate earnings and the likelihood that earnings growth will accelerate in 2025 due to operating leverage that led to his change in bearish view to bullish,” notes Insider.

Meanwhile, Kolanovic argued that EPS (earnings per share) growth in the third and fourth quarters will need to rise 16 percent compared to the first quarter of 2024 to meet expectations.

“This is unlikely, especially if the recent period of softer activity data flow continues,” he wrote.

He also warned that new incoming AI technology is not fit to save the market.

“We do not believe that narrow issues such as AI chips can offset all of those traditional market challenges that have historically worked against the cycle,” he wrote.

Not everyone agrees with him about AI:

#AI or #artificial intelligence!! That's all I've heard about these days. We had a crazy tech rally during covid. When the pandemic ended, inflation and interest rates rose and the tech mega rally fizzled out.

Now we have a new rally!

ChatGPT has let investors… pic.twitter.com/RV0WkzC4OX

— James Eagle (@JamesEagle17) June 6, 2023

Kolanovic wasn't always a bassist.

“The widely followed Wall Street strategist was bullish on stocks for much of the 2022 bearish run, only to turn bearish in mid-October 2022,” notes Insider. “From there, Kolanovic has remained consistently bearish on stocks through 2023 and 2024, when a more than 40% rally for the S&P 500 materialized.”

That said, this is the second time in months that he has warned of the next potentially fatal fall in the S&P.

Last October, it issued the same warning, saying there had been a 20 percent selloff in the S&P.

“I'm not sure how we're going to go about it [recession] if we stay at this level of interest rates,” he said CNBC at the time.

“[We’re] not necessarily calling for an immediate abrupt withdrawal. Could there be another five, six, seven percent upside in stocks? Of course… But there is a downside. It could be a 20% disadvantage,” he added.

He also warned that stop stocks, including Apple, Amazon, Meta, Alphabet, Nvidia, Tesla and Microsoft, were the most vulnerable and likely to suffer steep losses.

“If there is a recession, I think it's great [seven]… will catch where the rest is,” he said.

Interestingly, his negative outlook on the economy has earned him massive skepticism, presumably from Biden supporters.

Specific case:

Why does anyone listen to Kolanovic? How is he still employed?

— MississippiMade (@SpringBallHero) April 23, 2024

he and Mike Wilson have been bass players for years. time for another job

— Dan Gilbert (@DanGilbert17e) March 6, 2024

I mean he's been wrong for about two years. This is your cue to make calls.

— Sir Rickle Pickle (@PickleRicksGoat) April 23, 2024

“The stock market will continue to fall,” says someone who has an interest in it continuing to fall.

— Danielle (@DanielleM0116) April 23, 2024

4,200? No way. This would require a credit event and a large increase in unemployment (ie 6% in the US).

— Justin Hoddinott (@HoddinottJustin) April 24, 2024

As of the morning of May 23, the S&P continued to perform exceptionally well and had recently hit a new record high.

“Stocks closed with slight gains on Tuesday, sending the S&P 500, Nasdaq and S&P/TSX composite to record highs, as investors weighed the latest comments from Federal Reserve officials for clues about the timing of the rate cut while Nvidia's quarterly earnings closer,” the Globe and Mail reported.

Senior Staff Writer
[email protected]

V. Saxena is a writer for BizPac Review with a decade of experience as a professional writer and a lifetime of experience as an avid news junkie. He holds a degree in computer technology from Purdue University.

Latest posts from Vivek Saxena (see everything)

We have zero tolerance for comments that contain violence, racism, profanity, profanity, doxing, or rude behavior. If a comment is spam, instead of replying to it, click the ∨ icon below and to the right of that comment. Thank you for engaging with us in a fruitful conversation.