JP Morgan strategist: Even if the Federal Reserve cuts interest rates, US stocks may still stall near record highs

According to strategists at Morgan Stanley, even if the Federal Reserve initiates the long-awaited interest rate cut cycle, the upward momentum of US stocks may stall near record highs. Led by Mislav Matejka, the team of strategists stated that monetary policy easing is a response to economic slowdown, making it a "reactive" interest rate cut. Seasonal trends are another obstacle, as September is historically one of the worst months for the US stock market. "We are not out of the woods yet," Matejka wrote in the report. He reiterated a preference for defensive sectors against the backdrop of falling bond yields. "Market confidence and positioning indicators do not look as attractive, with rising political and geopolitical uncertainties, making September more challenging once again due to seasonal factors." (Bloomberg)