JPMorgan Recommends Risk Aversion Strategies: Selling US Stocks, Buying Gold, Holding Cash as US Stock Market Rally Stalls

JPMorgan strategist Marko Kolanovic advised clients to sell stocks further and hold cash, citing pending debt-ceiling talks, rising recession risks and a hawkish stance of Federal Reserve.

A team of JPMorgan strategists led by Kolanovic cut allocations to stocks and corporate bonds, while increasing cash investments by 2%. Within its commodities portfolio, JPMorgan also shifted from energy investments to gold to meet safe-haven demand and as a hedge against debt ceiling risks - another move by JPMorgan to bolster its defensive stance.

U.S. stocks stalled on Tuesday as investors awaited answers from Washington on what the federal government will do to avoid a catastrophic default.

Kolanovic was one of the biggest bulls on Wall Street through most of the market rout in 2022. But since this year he has changed his view on a deteriorating economic outlook, cuting JPMorgan's model equity allocation in mid-December, January, March and May.

"If interest rates remain high, they should weigh on equity multiples and economic activity," he said.

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