JPMorgan Chase on the financial sector
Previously, we discussed JPMorgan Chase’s (JPM) view that the S&P 500 (SPY) could reach new highs in future months. The investment company believes that the financial sector (XLF) could be a key driver of this rally. According to CNBC, JPMorgan Chase head of global fixed income and US equity technical strategy Jason Hunter wrote, “We continue to think Financials can lead the S&P 500 Index break to new highs this summer and the relative performance of that sector versus the broad market can recouple with rates over that period.”
Rate hikes and the financial sector
The financial sector could benefit the most from the Fed’s gradual rate hike process. Rising inflation, falling unemployment, and improving labor market conditions signal that the Fed may maintain its hawkish stance in the near future, resulting in a faster rate hike process.
As rates move higher, the financial sector and banking stocks (KBE) could benefit. Profits of major financial stocks such as JPMorgan Chase, Bank of America (BAC), and Citigroup (C) are expected to rise significantly, which, according to JPMorgan Chase, could boost the S&P 500 to new highs. For more analyst views, read Goldman Sachs: Rising US Debt Level Could Pose a Threat for GDP.