The inflation spread between producer price inflation and consumer price inflation seems to have peaked, according to JPMorgan.

Earnings upgrades may not be enough to push stocks higher, according to JPMorgan.

The second-quarter earnings season has set off to a strong start with Wall Street giants from Goldman Sachs and Bank of America to Big Tech names including Google-owner Alphabet and Tesla reporting in the past two weeks. BNY Mellon, Johnson & Johnson and software company ServiceNow are among those that have lifted their forecasts for the year.

"Earnings upgrades are plentiful, but the trend in revisions suggests the fuel may be running low," strategists at JPMorgan, led by Khuram Chaudhry, wrote in a note on Thursday. The war in Iran has changed the landscape for inflation, and in turn, both short-term and long-term expectations for interest rates, they said.

The spread between producer-price inflation and consumer-price inflation, which sales generally have a 47% correlation to and earnings per share usually have a 29% correlation to, seems to have peaked and is currently stalling, per JPMorgan.

"If, indeed, this trend continues then the risk is that further rises in both EPS and sales forecasts may be limited," the strategists said. They added that the U.S. Institute for Supply Management's orders-to-inventories ratio has also been slipping over the past three months, which adds to the same risk.

Another factor is the number of companies where analysts disagree on future outcomes, where stocks have a wide gap between the lowest and the highest estimate for EPS.

"Today, high dispersion stocks appear to have peaked and are starting to lose some of the lofty gains they've gathered over the past couple of years," the strategists said, adding that a similar argument could be made for high-risk stocks compared to more reliable, lower-leverage stocks.

The S&P 500 SPX ended Wednesday just over 1% away from a record high, but it's been basically flat this month.

-Nora Redmond

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July 23, 2026 05:48 ET (09:48 GMT)

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