Higher yields are back in the driver's seat for stocks. Peters told Bloomberg Television that rising oil prices are fanning inflation worries and have nudged the 10 year Treasury to about 4.8%, nearing the 5% level many see as unfriendly to equities, while the 30 year has climbed to a 19 year high. She noted growing chatter that policymakers could be pushed to raise rates, which would take yields back toward where they stood prior to Treasury Secretary Scott Bessent expanding buybacks to rein in long term borrowing costs.
Over the last 25 years, September has been the S&P 500's weakest month on average, according to Bloomberg.
Peters said the surge in second quarter earnings is unlikely to last. She flagged that US earnings grew about 30% and Europe around 15%, and that pace should slow. The positive twist, in her view, is that the expansion has been broad, with sectors such as financials, industrials, and utilities each making meaningful contributions, which she sees as a healthier setup than a tech-only rally.
Her team's core view is unchanged: a capital expenditure supercycle is fueling an earnings supercycle. Within that, she pointed to utilities alongside financials and technology as favored spots, citing their role in powering AI infrastructure. She also warned that limited electricity supply and shortages of memory chips could cap how fast AI can scale. The real medium term test, she said, is proving that the heavy AI spend is delivering returns on investment capital for both the companies building it and the customers buying those services across the economy.
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Peters said JPMorgan favors the US alongside emerging markets, while Europe is described as neither clearly winning nor losing. She still expects additional gains in US and European shares this year, but a 5% to 8% drop is on the table heading into November's US midterm elections and other potential flashpoints. For your portfolio, that points to a market that can keep climbing on fundamentals, yet is sensitive to rate jitters and seasonal chop if the inflation narrative heats back up.