After experiencing an impressive rebound, investors can't help but ask whether this market rebound has already ended.
Andrew Tyler, head of the market department at JPMorgan Chase, answers: Not yet.
In a recently released report, Tyler stated that the core elements of the current bull market still exist (macroeconomic data is resilient, earnings are improving, and trade tensions are easing), but the speed of recovery makes this rise one of the &#34;least popular&#34; increases, with incremental buying mainly coming from retail investors and corporations.
Tyler also pointed out that while the risk of a pullback is rising, the likelihood of a significant pullback is low. Concentration risk will exacerbate concerns about pullback risks, as this may resemble the market in the first half of last year, primarily concentrated in large tech stocks. The S&amp;P 500 index is expected to reach historical highs (6,144 points) this quarter.
<h2>Rising Yields Drive Investors Toward the Stock Market</h2>
JPMorgan Chase analyzed the market's reaction to the 10-year U.S. Treasury yield breaking 4.5%.
Tyler believes this is not entirely a negative factor. His colleague John Schlegel found that in the post-pandemic era, when the 10-year U.S. Treasury yield hits new highs, the stock market needs 1-2 months to digest and adjust. The cycle peak is 5%, so there is still some room for growth.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8413eac1-0301-4c68-b17f-bb21fe712f19.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8413eac1-0301-4c68-b17f-bb21fe712f19.png"/>
JPMorgan Chase further pointed out that the rise in yields should prompt investors to shift toward high-quality stocks, especially large tech stocks, while putting pressure on consumer staples and utilities sectors.
The bank's interest rate strategists also raised their forecast for the 10-year Treasury yield at the end of 2025 from 4% to 4.35%, and the 2-year Treasury yield forecast from 3.1% to 3.5%. This increase in yield forecasts stems from higher real GDP growth expectations and lower inflation expectations, leading to a delay and reduction in the magnitude of the interest rate cut cycle.
Despite the significant market rebound, institutional holdings show a different picture—hedge funds are still net selling, leverage remains near historical lows, and market sentiment is subdued.
JPMorgan Chase believes that due to the prevailing skepticism in the market, if this rebound can indeed sustain, unexpected situations may arise.
<h2>Market Sentiment is Relatively Optimistic, Mag 7 is Returning to &#34;Old Patterns&#34;</h2>
Other members of JPMorgan Chase's trading department also shared their views:
Brian Heavey from the TMT department noted that active bullish investors seem under-allocated, underperforming the rise of the S&amp;P 500 index. Nevertheless, there has not been a large-scale &#34;chase high&#34;—the bank actually net sold tech stocks yesterday.
As broader indices recover key support levels, CTAs are starting to become better buyers, stock buybacks are increasing, and any short-term declines may be shallow, as active funds will be forced to re-enter higher-risk/higher-beta stocks
Paige Hanson from the industrial sector pointed out that the market rebound on Tuesday demonstrated the resilience of the industrial sector, which had previously underperformed on Monday due to short covering in the industrial and cyclical stocks; however, on Tuesday, these favored cyclical stocks experienced a catch-up rally, outperforming the market, and the rebound was healthier, indicating active accumulation rather than passive short covering.
At the same time, according to feedback from JPMorgan Chase's recent technology conference held in Boston, despite significant market volatility in stocks such as chemicals, transportation, and housing, there has not yet been any substantial change in market sentiment, with businesses and investors maintaining a relatively optimistic outlook on the macro/market.
Briggs Barton from the consumer sector stated that the latest data shows that as of May 6, consumer spending data is performing positively.
Marissa Gitler from the futures and options department noted that the Magnificent 7 is returning to the &#34;old pattern,&#34; where &#34;safe&#34; large tech stocks can be bought when there are concerns about the macro outlook.
At the beginning of the year, funds flowed out of U.S. risk assets, primarily concentrated in the Magnificent 7. Now, funds are flowing back into U.S. risk assets, seemingly reversing this trend and narrowing the gap

JPMorgan Chase's market department stated that the core elements of the current bull market still exist (macroeconomic data is resilient, earnings are improving, and trade tensions are easing), and the likelihood of a further pullback is low. It is expected that the S&P 500 index should reach a historical high of 6,144 points this quarter

- After a significant rebound, investors are questioning whether the market rally has ended, but JPMorgan's Andrew Tyler believes it has not.  
- He notes that key elements of the current bull market remain intact, despite rising risks of a pullback, particularly concentrated in large tech stocks, with the S&P 500 expected to reach historical highs.  
- Additionally, rising yields are prompting a shift towards high-quality stocks, while institutional sentiment remains cautious, indicating potential volatility ahead.

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The hottest question right now: Has the US stock market reached its peak in the rebound? JPMorgan Chase's market department: Not yet, this is really painful