JPMorgan Chase: US stocks will continue to see slow gains through the end of the year, driven by sector rotation.

JPMorgan strategist Fabio Bassi believes US stocks still have room to rise by the end of the year, but the rally will rely more on sector rotation rather than a synchronized advance across all risk assets. The bank maintains a constructive view on equities, favoring high-quality growth stocks, cloud computing leaders, and semiconductor sectors that have undergone repricing. This assessment comes as US stock moves have grown more selective. Recently, volatility in the Nasdaq and Philadelphia Semiconductor Index has expanded significantly, with some previously strong stocks in the AI sector facing concentrated sell-offs. Investors have begun reassessing AI revenue realization, capital expenditure returns, and long-term interest rate pressures. JPMorgan notes that this volatility does not necessarily signal the end of the bull market; it is more likely an indication that capital is rotating out of crowded trades and into areas with higher earnings visibility and more digestible valuations. The bank also interprets the rise in long-term US Treasury yields as a sign of rising capital demand and improving investment opportunities. Investments in AI infrastructure, power grids, data centers, and cloud computing are absorbing large amounts of capital, and the market will continue to balance between "growth opportunities" and "financing costs".