Markets

J.P. Morgan Private Bank claims correction as deep as 14% likely

J.P. Morgan Private Bank is suggested a correction as deep as 14{d3504fbcdeb81bdc8fcd95bbbe4a10927085f26f9c7d3b1ab66ca60ecac7168d} is likely and that its clients should buy when that happens.

The stock market hasn’t seen a 10 percent or more sell-off in two years and this is an indication that a downward trend is most likely to happen this year and when that happens, the investment bank says they want their clients to be prepared to buy those pullbacks.

If the Dow suffers a 14 percent blow now, it would take the index down nearly 3,500 points. The S&P 500 would fall by 380 points, based on Wednesday’s close.

So what could trigger the correct? Analyst at the investment bank believe a geopolitical event or a more aggressive Federal Reserve could be catalysts. However, the correction wouldn’t last for long considering that tax overhaul in the US and global backdrop are positive for stocks — particularly financials, industrials and parts of health care.

Patrick Schaffer, a specialist at the bank, who manages more than $150 billion in assets, sees robust earnings as the rally’s main driver now. According to his calculations, tax reform adds another 10 to 12 percent to S&P 500 earnings.

“The fundamental backdrop is as strong today as it’s been at any point during this cycle,” Schaffer said. “We think we can exit the year in the neighborhood of 3,000 in the S&P 500.”

About the author

David Bizley

David Bizley

David Bizley has worked on Oilfield Technology. While performing editorial role, he also works as a contributor and is actively involved in the commissioning of material for both the magazine and its expanding online presence.

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