JPMorgan’s Matejka Says the Market’s Upswing May Lose Steam After the Fed Cut

The latest upswing in equities may run out of momentum once the Federal Reserve delivers its widely anticipated rate cut, as many investors could shift toward profit-taking, according to strategists at JPMorgan Chase & Co.

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Right now, markets are assigning roughly a 92% probability that the Fed will trim borrowing costs on Wednesday. Expectations have climbed steadily in recent weeks, fueled by increasingly supportive remarks from central bank officials. Those comments have helped drive stocks higher leading into the decision.

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“Investors may prefer to lock in recent gains as we head toward year-end instead of adding new directional exposure,” wrote a team led by Mislav Matejka. “The upcoming cut is already fully priced in, and equities have returned to their highs.”

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Even with the possibility of a near-term pause in the rally, JPMorgan’s strategists remain optimistic about the medium-term outlook. They believe a more dovish Fed will ultimately bolster equities, especially as several inflation-friendly trends take shape. Softer oil prices, slowing wage pressures and diminishing US tariff risks should give policymakers room to ease without triggering a fresh inflation surge, Matejka noted.

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Global equities have staged a strong rebound in recent weeks, climbing back toward the record levels last seen in October. Despite this strength, questions still linger around the Fed’s policy path heading into 2026, largely due to mixed economic data and an uneven US labor market.

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According to JPMorgan, several additional catalysts could support equities throughout 2026. These include a decline in global trade tensions, signs of stabilization in China’s economy, rising fiscal spending across the euro zone, and faster adoption of artificial intelligence technologies within the US. Together, these forces could help sustain corporate earnings and keep market sentiment constructive.

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Matejka previously cautioned that the US stock rally might falter after the Fed’s September rate cut, a prediction that partially materialized as markets moved through a stretch of heightened volatility.

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However, recent weeks have brought renewed strength as investors grow increasingly confident that a December cut is on the table. That shift in expectations has helped lift major indexes, even as broader macro uncertainties remain.

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Investor positioning also reflects a growing appetite for risk. More than three-quarters of asset managers surveyed informally by Bloomberg across Asia, Europe and Wall Street reported that they are adjusting their portfolios toward a risk-on stance through 2026. This positioning suggests that many professional investors are preparing for a more supportive environment for equities despite the near-term possibility of a pullback.

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Overall, JPMorgan’s message is clear: while the market may cool temporarily after the Fed’s expected move, the broader setup for stocks remains encouraging. A friendlier monetary policy backdrop, easing inflationary pressures and improving global fundamentals could help sustain the equity recovery well into 2026, even if short-term volatility persists.

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