The two essentials to keeping the near-term rally going – J.P. Morgan

There are two key data points maintaining stocks afloat, according to J.P. Morgan analysts. Those are Broadcom’s (NASDAQ:AVGO) earnings coming soon, and the non-farm payrolls.

J.P. Morgan analysts remain tactically bullish on U.S. stocks, but with “lower conviction as trade war rhetoric escalates and the legal cases surrounding tariffs offering little reprieve.”

Company earnings have stayed strong, and macro data has not yet reflected economic struggle caused by tariffs and the trade war.

Nvidia (NVDA), however, has given back most of its post-earnings gains, but Broadcom (NASDAQ:AVGO) – which reports on Thursday – gained 5.8% last week and 25.8% in May.

“AVGO printing in-line and [the non-farm payrolls] staying above 100k and this is a market that is likely to continue to rally with the S&P 500 (SP500), (SPX) 3.9% below all-time-highs,” analyst said.

They believe a non-farm payroll print in the 75,000-80,000 range would count as a “yellow flag” and “anything under 50k would be a ‘red flag.’”

“That said, the earliest we think we would see either downside risk is at the July 3 print. The risks are skewed to the upside, as we think we are in a ‘good news is good news’ type of macro environment.”

“Positioning suggests that investors are net bearish, waiting for what they believe is an inevitable decline in the economy due to the trade war… Our tactical view is more sanguine as we see more economic resilience, in the near-term,” analysts concluded.