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US Stocks Continue Higher – JP Morgan

US Stocks Continue Higher - JP Morgan

The global growth recovery and the end of trade disputes will combine with another year of buybacks, to continue to drive stocks higher in the next 12 months with the S&P 500 moving to 3,000 – JP Morgan equity strategist says. In addition this strategist expects the first-quarter earnings season to end up with profit growth 2 to 3% for the S&P 500. Note that many analysts were forecasting a decline in earnings. This analyst also expects stock buybacks to boom to $850 billion.

The strategists said they remain overweight cyclical sectors, including technology, consumer discretionary, and energy. They see energy having the best risk-reward with stock prices decoupled from oil prices. There are also existing buyback authorizations that have not been realized yet – to the tune of about $700 billion, as of the fourth quarter.

And companies have about $1.5 trillion in excess cash. With revenues growing at an above-average 5%, which the analyst said is a strong sign of healthy demand. The earnings surprise this quarter is expected to be 4% to 5% – many did not see this coming and of course it is giving stocks a boost as 140 companies report this week with 78% beating expectations.

JP Morgan`s Parker laid out this map, we sourced it from CNBC.


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