JPMorgan Note Credits ChatGPT for Stock Market Rally
In a recent note by JP Morgan, the bank has given credit to ChatGPT for the stock market rally. According to the note, interest in artificial intelligence has been a driving force behind more than half of the gains in the S&P 500 this year. However, the bank does not view this as a positive thing.
The strategists at JP Morgan believe that the gains made through AI and the rotation into safety have resulted in the narrowest stock leadership in an upmarket since the 1990s. The note, authored by Dubravko Lakos-Bujas and his team at the bank, identify specific stocks that have benefited from this phenomenon, including Microsoft, Google, Amazon, Meta, Nvidia, and Salesforce.
It is noteworthy that 53% of S&P 500 performance and 54% of NASDAQ growth are attributed to language learning model innovation companies by JP Morgan. As earnings season approaches, many companies are expected to lean into this narrative even further. Investors will be keen to hear about the monetization efforts and their long-term run rate.
The JP Morgan note also highlights the current degree of crowding and the implications of the risk of recession. With such a dispersion of opinions in the markets, it is not entirely clear where the stock market is headed. The possibility of the Fed cutting rates by the end of the year has implications for both the market's reaction and the likelihood of an impending recession.
As many have pointed out, a rate cut by the Fed would indicate a worse situation for the economy, which would affect stocks. With the current state of the market, it is hard to determine a clear trajectory, and investors are closely watching for any changes or updates that may provide clarity.
