JPMorgan laid out five distinct Federal Reserve decision paths and their projected impact on the S&P 500, ranging from a 2.0% decline to a 1.0% gain, with the outcomes hinging heavily on the accompanying rhetoric from Fed Chair Kevin Warsh. The bank's baseline, which aligns with the consensus Wall Street view, is a 25 basis point hike with no explicit forward guidance, a combination JPMorgan expects to contain the back end of the yield curve and lift equities by 0.25% to 0.75%. At the opposite end, a 25 basis point hike paired with a signal that rates must go "materially higher" is described as a potential market regime change that could end the bull market entirely and drive the index down as much as 2.0%. JPMorgan also views a no-hike pause as highly bearish, projecting a decline of 1.25% to 1.75% on fears the Fed is losing its fight against inflation, while a 25 basis point hike with a clear signal that the Fed will take back 2025 rate cuts could lift equities by up to 1.0%. A 25 basis point hike accompanied by commentary on a higher R-star introduces technical risk, with traders potentially pricing in cumulative hikes of a full percentage point or more.
JPMorgan Chase & CoJPMorgan maps five Fed decision paths and their S&P 500 impact, but the article gives no company-specific development for JPMorgan itself.
