JPMorgan: U.S. Stocks Could Drift Higher Into Year-End, Relying on Rotation

BlockBeats News, August 25th. Morgan Stanley strategist Fabio Bassi believes that the US stock market still has room to continue its upward trend by the end of the year, but the market will rely more on sector rotation rather than a synchronous rise in all risk assets. The bank maintains a constructive view on stocks, preferring high-quality growth stocks, leading cloud computing companies, and the semiconductor sector that has undergone repricing.

This assessment comes at a time when the US stock market has become more selective. Recently, the Nasdaq and Philadelphia Semiconductor Index have seen significant volatility. Some previously strong stocks in the AI chain have experienced concentrated selling pressure, prompting investors to reassess AI revenue realization, capital expenditure returns, and long-term interest rate pressures. Morgan Stanley believes that this volatility does not necessarily mean the end of the bull market, but rather indicates that funds will exit crowded trades and move towards directions with higher earnings visibility and more digestible valuations.

The bank also interprets the rise in long-term US bond yields as a signal of increasing capital demand and investment opportunities. Investments in AI infrastructure, the power grid, data centers, and cloud computing are absorbing significant capital, and the market will continue to seek a balance between "growth opportunities" and "cost of financing."