JPMorgan traders say the market will continue running until Nvidia reports earnings in late August

JPMorgan's trading desk maintains a "tactically bullish" stance on the stock market, anticipating continued gains through summer driven by resilient macro data, positive earnings growth, and easing trade tensions, despite the S&P 500's recent record highs. However, the firm warns that Nvidia's earnings on August 28 could serve as a "sell-the-news" event, potentially prompting a market pullback into seasonal weakness.

Analysis

JPMorgan's trading desk has articulated a "tactically bullish" short-term outlook on the stock market, anticipating continued upward momentum through the summer. This view is supported by three core pillars: resilient macroeconomic data, positive corporate earnings growth, and a de-escalation in trade war rhetoric, highlighted by a recent U.S.-E.U. trade agreement. The firm's analysis follows a significant 30% rally in the S&P 500 from its April 7 low, which has propelled the index to record highs. However, this bullish sentiment is tempered by a specific, time-bound risk catalyst: Nvidia's (NVDA) earnings report scheduled for August 28. Given NVDA's powerful nine-week winning streak and an over 80% gain since early April, JPMorgan flags the event as a potential trigger for a "sell-the-news" market correction. This potential downturn aligns with historical seasonal weakness, as September is noted to be the market's worst-performing month, suggesting a period of consolidation may follow the summer rally.

Key Decisions for Investors

• Consider maintaining a tactically bullish equity posture in the near-term to capitalize on the positive momentum, but prepare for increased volatility as summer progresses.
• Investors should mark Nvidia's August 28 earnings as a key risk event that could trigger a broader market pullback, making it prudent to review exposure to high-flying tech stocks ahead of the date.
• Closely monitor this week's market-moving events, including the Federal Reserve's rate decision, the July jobs report, and MegaCap Tech earnings, as they will serve as a critical test of the market's current resilience.