Contrasting market commentary from two major banks

Strategists at JPMorgan and Bank of America (BofA) have diverged in their expectations for the S&P 500. Strategists from the two major banks have offered opposing views on the recent stock rally. According to JPMorgan Chase Strategist Marko Kolanovic, rallies of the type seen in technology companies, which have recently been called the “Magnificent Seven,” are usually followed by a correction. “Momentum is a dynamic factor that changes a stock’s exposure to macroeconomic and fundamental conditions. Therefore, these crowded trades are often followed by sharp corrections,” Kolanovic said in a note to clients on Monday. According to Kolanovic, there have been three such corrections since the 2008 financial crisis. Bank of America Strategist Savita Subramanian, on the other hand, is not concerned about the rise in U.S. stocks. The bank’s strategists, including Subramanian, said they do not see any signs of a bubble forming in the S&P 500 index. Strategists said U.S. stocks were not showing signs of a market bubble seen in the past, such as a gap between price and intrinsic value and the use of large leverage indicative of speculation.