Finance
Big Tech, Mag 7 fueling market rally, not tariff hopes: Morgan Stanley
Morgan Stanley’s Mike Wilson sees a meaningful rotation back into U.S. stocks, and he sees one beaten-up group as a winner.
“It started out with a low-quality rally, which is what we expect – meaning a short squeeze,” the firm’s chief investment officer told CNBC’s “Fast Money” on Monday. “Then, what we noticed is the revision factors on the Mag Seven are actually starting to stabilize a bit. So, the last couple of days though stocks have acted better, and that can take the index higher. How high? 5,900. So, we’re almost there.”
The major indexes had a notable start to the week. The S&P 500 gained roughly 1.8% and closed at 5,767.57 — about 6% below its all-time high. Meanwhile, the Dow jumped almost 600 points while the Nasdaq Composite surged more than 2%.
The “Magnificent Seven” had a big role in Monday’s rally. Its members include Apple, Nvidia, Meta Platforms, Amazon, Alphabet, Microsoft and Tesla. The electric vehicle maker registered its best daily performance since November.
But Wilson, who’s also the firm’s chief U.S. equity strategist, suggests a narrow window for gains. He focused his Monday research note on the idea.
“Stronger seasonals, lower rates and oversold momentum indicators support our call for a tradeable rally from ~5500,” he wrote. “A weaker dollar and stabilizing Mag 7 EPS [earnings per share] revisions can drive capital back to the US. Beyond the tactical rally, volatility will likely persist this year.”
And, he won’t rule out new lows for the year.
“Whatever rally we’re getting now, we think probably end up fading into earnings, into May and June,” he added. “Then, we’ll probably make a more durable low later in the year.”
According to Wilson, the market weakness is mostly tied to fundamentals and technicals.
‘Nothing to do with tariffs’
“The reason the markets are lower over the course of the last three or four months has nothing to do with tariffs,” said Wilson. “It’s mostly to do with the fact that earnings revisions have rolled over. The Fed stopped cutting rates. You had stricter enforcement on immigration. You have [Department of Government Efficiency]. All of those things are growth negative.”
Wilson’s S&P 500 year-end target is 6,500, which implies a nearly 13% gain from Monday’s close.
“Could we make a new high in the second half of the year as people look forward to 2026? Yeah,” Wilson said.
Join us for the ultimate, exclusive, in-person, interactive event with Melissa Lee and the traders for “Fast Money” Live at the Nasdaq MarketSite in Times Square on Thursday, June 5th.
A living space in the new J.P. Morgan financial center branch format in Palm Beach.
Courtesy: JP Morgan
JPMorgan Chase thinks it has cracked the code on managing more money for America’s millionaires.
It’s not a new financial product, a novel software program or an enticing sign-up bonus. Instead, it’s a refurbished take on an old concept — the brick-and-mortar bank branch — along with new standards for service that are at the heart of its aspirations.
The bank is unveiling 14 of these new format branches — each acquired when JPMorgan took over First Republic in 2023 — in tony ZIP codes in New York, California, Florida and Massachusetts, including Napa, Palm Beach and Wellesley Hills.
It’s part of JPMorgan’s push to convince affluent Americans, many who already use Chase checking accounts or credit cards, that the bank is ready to manage their millions.
JPMorgan is the country’s biggest bank by deposits and assets and has a top share in areas as disparate as Wall Street trading and retail credit cards. But one of the only major categories where it isn’t a clear leader is in wealth management; peers like Morgan Stanley and Bank of America exceed it there.
While half of the 19 million affluent households in the U.S. bank with JPMorgan, it has just a 10% share of their investing dollars, according to Jennifer Roberts, CEO of Chase Consumer Banking.
“We have this giant opportunity to convince customers to have their wealth management business with us in addition to their deposit relationship,” Roberts said in a recent interview.
Helped by its acquisition of First Republic, which was known for catering to rich families living on either coast, JPMorgan decided to launch a new tier of service. Called J.P. Morgan Private Client, it is anchored by the new physical locations, of which there will be 31 by the end of next year.
The service comes with its own mobile banking app, but its main appeal is the in-person experience: Instead of being handed off to multiple employees like at a Chase branch, J.P. Morgan Private Client members are assigned to a single banker.
“What First Republic did really well was deliver a concierge-level of service where if you have an issue, a person owned it for you and you didn’t have to worry about it,” Roberts said. “So with this experience we are going to deliver a more elevated concierge type of service, like you would expect at a high-end hotel.”
The price of entry: at least $750,000 in deposits and investments, though Roberts said the bank is aiming for those with around $2 million to $3 million in balances.
Quiet opulence
The new locations, dubbed J.P. Morgan Financial Centers, have a warm feel and an earth-tone color palette that intentionally sets them apart from the nearly 5,000 Chase branches operated by the bank.
During a recent visit to a Manhattan location, the vibe is family office-meets hotel, with soaring ceilings, living room-style seating areas and art-filled meeting rooms scattered over two floors.
Gone is the traditional row of bank tellers; there is instead a concierge desk and a solitary ATM machine. Instead of lollipops, visitors are offered squares of Dylan’s chocolate. The space is quiet, except for the crack of a Perrier being opened or the whir of an espresso machine.
JP Morgan’s Palm Beach Reception.
Courtesy: JP Morgan
The design elements and hushed environment are “really meant to illustrate that we’re there to have a more serious, less-transactional conversation about your wealth planning over the course of time,” said Stevie Baron, JPMorgan’s head of affluent banking.
Those conversations involve planning for long-term goals and examining clients’ portfolios to see whether they are on track to reach them, he said.
Elements of the new high-end branch format could find their way to regular Chase branches, especially the 1,000 or so that are in high-income areas, Baron said.
JPMorgan executives have said the bank’s branch network has already succeeded as a feeder into the firm’s wealth management offerings.
The new service tier — which sits above the bank’s Chase Private Client offering, which is for those with at least $150,000 in balances and is delivered in the regular branches — is expected to help JPMorgan’s retail bank double client assets from the $1.08 trillion it reached in March.
“Obviously it’s a big challenge, because clients already have their established wealth managers, but it’s something that we’ve been making really strong progress in,” Roberts said.
Come one, come all
But attempting to create a new, more luxurious brand from a mainstream one — think the difference between Toyota and its luxury brand Lexus — is not without its risks. Or at least, momentary confusion.
So far, the two flagship financial centers in New York and San Francisco opened late last year haven’t seen heavy foot traffic, Roberts admitted.
“Our biggest challenge is that we don’t have people walking in because they don’t really understand what they are,” Roberts said. “So we just need to get the awareness out there.”
While JPMorgan is leaning on the first part of its name, rather than Chase, to signal exclusivity for the new branches, that may deter people from walking through the doors and starting conversations.
“I just want this to be acknowledged: We’re never going to turn someone away. Any customer can come and leverage any of our branches at any time,” Roberts said.
“We want people walking in, having the experience, meeting with our experts and understanding how we can help support their financial goals over time,” she said.
AICPA’s Carl Peterson to retire
IRS leveraging AI for audits amid layoffs
Illinois passes CPA licensure changes bill
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics1 week agoThe MAGA revolution threatens America’s most innovative place
-
Accounting5 days agoHouse tax bill includes provision eliminating PCAOB
-
Economics6 days agoWhat happens if the Inflation Reduction Act goes away?
-
Personal Finance5 days agoWhat House Republican ‘big beautiful’ budget bill means for your money
-
Economics1 week agoThree paths the Supreme Court could take on birthright citizenship
-
Accounting5 days agoTrump tax bill faces Senate’s arcane rules, desire for changes
-
Economics1 week agoJoe Biden did not decline alone
-
Finance4 days agoPersonal finance app Monarch raises $75 million