MW A cruel summer looms, but here's why JPMorgan still expects a higher S&P 500 finish this year

By Jamie Chisholm

The mood will improve later in 2025 as tariff angst eases, and focus turns to tax cuts and deregulation

Investors are feeling a bit more chipper. The S&P 500 has jumped 6.3% over just the last three days, and is up 10% from its April 8 closing low.

The vibe shift, it seems, is predicated on U.S. President Trump denying he will try to fire Federal Reserve Chair Jerome Powell, and the administration indicating progress on trade deals with South Korea, Japan and India that could serve as templates for other nations.

The rhetoric around trade with China, at least from Washington, if not Beijing, has softened a touch, too.

All very nice.

And its why: "In the very short term, the equity pain trade likely remains to the upside as the market prepositions on tariff de-escalation," says a team of JPMorgan global equity strategists led by Dubravko Lakos-Bujas. In other words, a sudden improvement in stocks has caught many traders badly positioned.

But don't get too ebullient. In their note published Friday, JPMorgan add that more clarity and closure on tariffs is required if further damage to the business cycle is to be avoided. And they fear that "as the summer approaches, we could start to see some softness in activity due to aggressive tariff related front-loading, lagged effects of other policies, and lower business investment activity."

In addition, the current reporting season will continue to see companies delivering less optimistic guidance, which will cause analysts to crimp second-quarter earnings estimates, they say.

Also, outflows from foreign investors, spooked by Trump's trade policies and a falling dollar, are unlikely to meaningfully reverse in the near future, JPMorgan says. And that means the S&P 500 SPX will struggle to recover the price to earnings multiple of about 22 to 24 times that it was afforded in recent quarters.

They accept, however, that Wall Street will continue to trade at a valuation premium to most other bourses. "We see an upper bound multiple closer to around 20x [times] as reasonable given U.S. companies remain among the highest quality names in the world, supported by sustainable growth, high pricing power and margins, and the ability to recycle cash flow into future growth projects (i.e., AI continues to make progress in the background) and capital returns."

Still, in this scenario the S&P 500 could retest their base case of 5,200, with earnings per share of $250 for 2025 and $280 for 2026.

The better news from JPMorgan is that they reckon this earnings season will also see U.S. corporates deliver record buyback executions because of the better opportunity provided by the market's decline, while lower energy prices, a weaker dollar, and easier monetary policy will also be supportive for stocks.

Further out, the tariff angst should have died down during the second half of the year allowing attention to turn to equity-positive policies like tax cuts and deregulation.

Together these factors will provide an improving backdrop and the prospect of healthier economic growth in 2026. That in turn will help the S&P 500 to finish 2025 closer to JPMorgan's bull case of 5,800, on EPS of $260 this year and $290 next.

Markets

U.S. stock-index futures (ES00) (YM00) (NQ00) have turned mixed, as benchmark Treasury yields BX:TMUBMUSD10Y trade little changed. The dollar index DXY is rising, while oil prices (CL.1) slip and gold (GC00) is trading down to around $3,315 an ounce.

   Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              5484.77    3.83%   -3.66%  -6.75%   8.64% 
   Nasdaq Composite                                                     17,166.04  5.40%   -3.58%  -11.11%  9.96% 
   10-year Treasury                                                     4.298      -3.20   5.90    -27.80   -37.10 
   Gold                                                                 3315.3     -0.78%  6.33%   25.61%   41.10% 
   Oil                                                                  62.63      -1.76%  -9.28%  -12.86%  -25.16% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

U.S. economic data due Friday includes the University of Michigan consumer sentiment survey for April, released at 10:00 a.m. Eastern.

Apple $(AAPL)$ aims to source all its U.S.- sold iPhones from India as soon as next year in a pivot away from China, according to the Financial Times.

China is considering suspending its 125% tariff on some U.S. imports as certain industries are badly hit by surging costs, according to Bloomberg,

Alphabet shares $(GOOGL)$ are jumping after the Google parent beat Wall Street earnings estimates.

Companies releasing earnings before the opening bell on Friday include SLB $(SLB)$, AbbVie $(ABBV)$, Colgate-Palmolive $(CL)$ and Phillips 66 (PSX).

The U.S. will loosen rules on self-driving vehicles that were criticized by Tesla's chief executive Elon Musk.

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The chart

There's been a lot of chatter about U.S. assets shedding their aura of exceptionalism, and that because of this investors may park relatively more funds elsewhere. As the chart below from BlackRock's Q2 Equity Market Outlook shows, either European stocks must rise more or U.S. equities fall further for the valuation gap even to match its average over the past decade or so.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   GOOGL   Alphabet 
   PLTR    Palantir Technologies 
   AMZN    Amazon.com 
   AAPL    Apple 
   META    Meta Platforms 
   TSM     Taiwan Semiconductor Manufacturing 
   INTC    Intel 

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-Jamie Chisholm

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April 25, 2025 06:44 ET (10:44 GMT)

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