While hopes for a less aggressive Federal Reserve helped US stocks overcome last week’s flurry of disappointing earnings from tech giants, JPMorgan Chase &. Co.’s trading desk now sees room for a massive rally should policy makers turn dovish when they announce their decision on Wednesday.
The S&P 500 could surge at least 10% in one day if the central bank raises interest rates by a slower-than-expected half of a percentage point, and Chair Jerome Powell signals willingness at the press conference to tolerate elevated inflation and a tightening labor market, according to the bank’s sales team including Andrew Tyler. The scenario is the “least likely” to materialize, yet the “most bullish” outcome for equity investors, the team wrote in a note to clients on Monday.
