Banking giant JPMorgan says a short-term market rotation may be taking shape as investors hunt for value outside Big Tech.
In a new interview on CNBC, Dubravko Lakos, head of global markets strategy at JPMorgan, says he expects a narrow tactical window where beaten-down areas of the market could see relief rallies.
Lakos says the potential rotation is a function of positioning, seasonality and valuation rather than a shift in long-term fundamentals.
“And we do think the broadening out could continue to run its course, but really only tactically short term into Q1. You could have some of these, like positive seasonals, as in sort of bottom fishing beginning of January. You guys just talked about a bit of a fiscal thrust kicking in from the OBBA (One Big Beautiful Bill) side that could help the consumer.”
He says parts of the cyclical and value universe are trading at depressed levels relative to earnings, creating conditions for a potential bounce.
“And then I think various parts of cyclicals, if you will, or value are trading trough on trough when you think about multiples and earnings. So you could get a bit of a lift.”
Lakos points to segments of the consumer economy that have been heavily punished, particularly lower-end consumer exposure and leisure-oriented businesses.
“So let’s say parts of consumer, like low-end consumer, have been really beaten up… You think about cruise lines, restaurants, the Las Vegas strip.”
He also highlights housing-linked and home improvement names as areas that could benefit from a rebound, while cautioning that the move should not be mistaken for a lasting trend.
“So that’s what I’m saying, the Home Depots of the world, you think about home improvement parts of housing. So I think these areas could see a bit of a lift. But I would argue it’s probably more of a tactical lift.”
Looking past the near-term rotation, Lakos says JPMorgan’s medium-term view into 2026 continues to center on artificial intelligence and its spillover effects across multiple sectors.
“We still think the big story remains centered around AI, where we think Big Tech hyperscalers remain very well positioned. Utilities we continue to like. Big banks, we think, are pretty large beneficiaries of AI, and then certain parts of healthcare, like pharma.”
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