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JPMorgan Billionaire Dimon Cheers Upcoming ‘Boom’—And S&P, Dow Back Near Record Highs

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With experts eyeing an impending economic “boom,” stocks are trudging back toward record highs Wednesday as long-struggling cruise stocks head up the market’s gains while technology firms continue to cool off—another sign the market’s recent reversal could continue as earnings season revs up next week.

Key Facts

Shortly after the market open, the Dow Jones Industrial Average and the S&P 500, which both closed at record highs Monday, climbed about 0.3% and 0.1%, respectively, while the tech-heavy Nasdaq fell about 0.3%.

Big tech firms, which have largely underperformed this year amid rising Treasury yields, continue to lag Wednesday: Tesla, Microsoft and Apple are all falling as much as 0.6%.

Outperforming the market, shares of the nation’s three largest cruise operators are soaring as the firms gear up for a long-awaited return to cruising, with Norwegian Cruise Line, Carnival and Royal Caribbean Cruises up 4%, 3% and 2.5%, respectively.

Other stocks climbing Wednesday include Victoria’s Secret parent, L Brands, water heater company A. O. Smith and Chipotle, which are up between 2% and 3% apiece.

Meanwhile, shares of blank-check company Mudrick Capital Acquisition Corp. II are holding on to their 15% Tuesday surge after the firm announced it’s taking sports memorabilia company Topps public in a deal valued at $1.3 billion.

In his annual note to shareholders, billionaire JPMorgan CEO Jamie Dimon said Wednesday that although stock valuations are “quite high by almost all measures,” an expected economic boom could justify the prices, echoing the sentiment among big banks Goldman Sachs and Morgan Stanley, which have recently touted the impending recovery.

Crucial Quote 

“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more [quantitative easing from the Fed], a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon said Wednesday. “This boom could easily run into 2023 because all the spending could extend well into 2023.”

Tangent

Fueling bullishness on the monetary policy front, Dallas Federal Reserve President Robert Kaplan told the Wall Street Journal Tuesday that it’s still too early for the central bank to pull its support of the economy. Instead, he said the Fed shouldn’t raise interest rates or stop pouring more than $100 billion into the economy each month until the country’s inflation and full-employment goals are met. 

Key Background

Massive fiscal stimulus, accommodative monetary policy and blowout corporate earnings have fueled huge gains for the stock market during the pandemic, but rising interest rates have created headwinds for high-priced stocks in recent weeks. That’s hit the booming tech sector particularly hard, with the Nasdaq falling as much as 11% from a February high. However, with interest rates taking a breather, vaccination rates ramping up and President Joe Biden announcing another $2 trillion in economic relief, stocks are rallying again. The Nasdaq is now down just 3% from its February highs and the Dow and S&P have surged to new highs this week.

What To Watch For

First-quarter earnings season starts next week, with big banks JPMorgan, Bank of America and Citigroup among firms slated to report beginning Wednesday.

Further Reading

JPMorgan’s Jamie Dimon Predicts An Economic Boom That Could ‘Easily’ Last Until 2023 (Forbes)

Energy Stocks Have Beaten All Other Sectors So Far This Year, But Analysts Divided Over Near-Term Outlook (Forbes)

Coinbase Posts Record $1.8 Billion In Revenue As Crypto Market Shoots Past $2 Trillion (Forbes)

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