J.P. Morgan Wealth Management’s head of investment strategy thinks the stock market has more room to grow.
Elyse Ausenbaugh says in a new interview with CNBC that AI investment is a powerful tailwind.
The investment strategist predicts the Federal Reserve’s easing and corporate profits will both play a role in equity prices going forward.
“We can’t discount the value of the Fed rate-cutting cycle. We’ve been implementing our so-called Fed rate-cutting playbook, and we expect that to play out, absent a recession, going forward. When you look at things like corporate profit margins still around the highest levels that they’ve been throughout this cycle, when you think about all of the investment that’s being funneled into infrastructure supporting artificial intelligence and the way that that’s filtering through sectors, and when you look through and kind of think about all of the uncertainty that’s finally starting to dissipate as it relates to things like tariff policy, we think that there is a path ahead to keep valuations supported but also continue to fuel earnings growth.”
Ausenbaugh says her firm is watching the jobs outlook closely, though she notes they are characterizing the labor market as “bending but not breaking.”
She acknowledges the substantial slowdown in hiring but predicts there won’t be “a meaningful rise” in layoffs.
“To seed that, usually throughout history it would require a meaningful deterioration of corporate profit margins, and with this momentum that we have going, we think that they can stay fairly well supported.”
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