3 reasons JPMorgan advises investors to “buy stocks when prices fall”

In times of uncertainty, simple advice is sometimes the most effective. And right now, according to JPMorgan, that strategy is “buy the dip.”

3 reasons JPMorgan advises investors to “buy the dip”

In a note to clients on Thursday, JPMorgan said it would take advantage of any correction to buy between now and the end of the year, even after a recent sharp decline due to concerns about high valuations in tech stocks.

“We will be buyers on price corrections for the rest of the year,” wrote a team led by Andrew Tyler, head of global markets analysis at JPMorgan.

The bank believes the bull market still has momentum and predicts the S&P 500 could soon surpass 7,000, representing a gain of about 3% from where it is now.

Three main reasons why JPMorgan is optimistic about US stocks:

The US economy remains strong

Despite warnings of a recession, JPMorgan believes the US economic growth momentum remains resilient.

Job market: Although the government shutdown has disrupted official data, signs from the private sector suggest employment is stabilizing. The private sector added 42,000 jobs in October, beating the forecast of 25,000, reversing the previous month when it lost 32,000 jobs.

Services sector: The ISM services purchasing managers' index (PMI) came in at 52.4%, reflecting a 2.5% GDP growth rate, reflecting continued expansion in the services sector.

GDP: JPMorgan forecasts US real GDP growth in the third quarter to be above the average trend, while the Atlanta Federal Reserve estimates third-quarter GDP growth of about 4%.

Corporate profits exceed expectations

As of the end of October, 83% of S&P 500 companies had reported earnings that beat forecasts - the highest rate since 2021, according to FactSet.

Analyst Ed Yardeni said the third-quarter earnings season was one of the best in more than three decades, with the beat rate in the top 10 since 1987.

Market headwinds are cooling down

Some of the big risks that once weighed on the market have eased or are about to disappear.

Trade war: While President Donald Trump's import tariffs await a Supreme Court ruling, JPMorgan said trade tensions are "thawing" as new deals are signed and policies become clearer.

Government Shutdown: The US government shutdown has temporarily choked liquidity, but when the government reopens, new money could flow into the market, creating short-term upside momentum.

“This is a bull market, and we view corrections like yesterday and possibly today as buying opportunities,” the JPMorgan analysis team emphasized.

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