Led by Andrew Tyler, JPMorgan's trading desk shifted from tactically neutral to a bullish stance on US equities, citing stronger-than-expected economic activity, steady consumers, robust profit growth and indications that bond yields may stabilize. Tyler put it plainly in a Monday morning client note: "We now see a more favorable setup for markets as bond yields find a level and oil prices are likely to trend lower, albeit in a choppy fashion."
In early June, Tyler adopted a tactically cautious posture before a multiweek US stock selloff unfolded, and he again leaned cautious in late August after a hawkish Jackson Hole speech by Federal Reserve Chairman Kevin Warsh that spurred traders to increase bets on rate hikes this year.
The team dropped its cautious posture before Friday's US jobs report and is monitoring two additional catalysts: the consumer price index due Oct. 14 and the Fed's next policy decision scheduled for Oct. 28. Economist forecasts peg September payroll growth at 90,000, coming after an unexpected 162,000 increase in August.
Volatility has been scarce. Through Friday, the S&P 500 has gone 41 consecutive sessions without a 1% daily drop - the longest run since October 2025, according to Bloomberg data. It has been six months since the index logged two consecutive drops of at least 1%.
The most recent one-day decline of that magnitude occurred on July 29 - when the Fed held a rate-decision meeting - sending the index down 1.5%. All of this tees up an interesting October, a month that has historically been the most turbulent for US stocks, with investors weighing the durability of the AI trade and the risk that sticky inflation keeps rates higher for longer.
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Tyler expects leadership in tech to broaden, with semiconductor shares participating and the so-called Magnificent Seven potentially topping the broader tech tape. As he put it, "the AI theme is likely to persist and we like owning the theme." He added, "We like tech in the near-term with earnings likely to provide additional support."
For a sustained move in cyclical stocks, Tyler wrote, "You need to see the yield curve bull steepening to see a persistent rally in cyclicals; excluding AI-related plays, we favor banks given the growth reboot, potentially steeper yield curve and favorable capital markets outlook."
Technology remains a core long for them, but they're backing off the earlier hedge by removing the Russell 2000 Index short that had been coupled with it, "given squeeze risk from a move lower in oil / yields, which points to using a derivative expression to play the squeeze," he added.
Bottom line for your wallet: a calmer tape, a busy macro calendar, and a bank desk leaning bullish can all shift the tone of this market. If jobs, inflation, and the Fed break the right way, the areas Tyler highlights - big tech, semis, and select banks - could be where the action clusters next.
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