⚓ **J.P. Morgan: Where Are Markets Headed in the Second Half of 2026?**
J.P. Morgan Asset Management's Meera Pandit reviews three scenarios that have each partly played out in the first half of 2026 — an AI course correction, stagflation, and accelerating growth — and expects the second half to reflect echoes of all three. The Fed is likely to stay on hold as inflation crests, keeping bond yields rangebound and income ample, while AI capex keeps driving growth even as investors rotate away from the 'Magnificent 7' and hyperscalers toward AI infrastructure builders in semiconductors, hardware and power. Earnings expectations have been revised up 9 percentage points year-to-date, and small-cap and emerging-market stocks have outperformed the U.S. Notably, most major asset classes have posted negative returns at some point in 2026 yet are now near the top of their yearly ranges, underscoring the case for staying diversified through continued volatility.
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