JPMorgan warns that the S&P 500’s recent gains may slow due to rising inflation and stagflation risks. The bank identified five headwinds for investors to monitor, including softening consumer sentiment, growing inflation concerns, and a widening gap between soft and hard data.
The bank expects a slowdown in the stock market’s momentum this summer, with trade negotiations and renewed US-China tensions potentially exacerbating the issue. JPMorgan also notes that bond yields could creep back up due to inflationary pressures, and earnings revisions are likely to be negative.
Furthermore, the bank believes that US stocks remain expensive, with a forward price-to-earnings ratio of 22x, which may not be sustainable in light of inflation and tariff concerns. However, international stocks may continue to shine, particularly if markets relapse into weakness.
Retail investors’ increased enthusiasm for buying the dip could also be seen as a contrarian signal for the stock market. With US households holding record amounts of stock, a potential pullback could lead to further selling pressure on the S&P 500.
Source: https://www.businessinsider.com/stock-market-outlook-stagflation-crash-inflation-trade-war-tariffs-economy-2025-6