The S&P 500 is about to record its best first half for the year in 10 years and the Dow Jones Industrial Average has recorded its best six months since June 1938, but under this impressive rally is a trend that does not look very well, according to JP Morgan.
From consumer sector to technology, cyclical actions are typically tied to economic growth and fail to recover their territory, which they lost in May, while only the defensive groups confirmed the strengths of the index.
"The leadership in this promotion is not yet very trustworthy. In our opinion, this divergence can only exist in the short term, therefore the potential of the S & P 500 is limited in current conditions," said Jason Hunter of JP Morgan.
Indeed, the strong performance of the markets in June has little to do with the economic fundamentals. Mainly fueled by the Fed's monetary policy change and the resumed hope for a US-China trade deal. The persistent weakness in cyclical actions traditionally correlates with economic health.
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