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JPMorgan Chase’s (JPM) shares fell with the broader market, after government data on Friday showed that inflation reached a 40-year high. So is JPM stock worth buying right now?
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The data raised the likelihood that the Federal Reserve could take a more aggressive path to raising interest rates, a move that makes borrowing more expensive and is one of the central bank’s main tools to cool off an overheating economy. But investors have questioned whether the Fed is can steer the economy through rising prices — driven by pandemic stimulus infusions, supply-chain backups and Russia’s invasion of Ukraine.
Banks generally raise their own rates, on things like credit cards and auto loans, in tandem with the Fed’s rate hikes. That can boost a bank’s net interest margins. But it can also hurt them if the broader economy can’t stomach the higher rates.
JPMorgan in April reported mixed first-quarter earnings and warned of “significant geopolitical and economic challenges” ahead as Russia’s war against Ukraine continues.
But at that time, CEO Jamie Dimon downplayed the prospect of a U.S. recession this year. Still, JPMorgan said the market upheaval caused by the invasion had cut into profits — prompting it to set aside more money to cover inflation risks.
JPMorgan is the biggest U.S. bank by market value. But despite the bank’s reputation, JPMorgan stock has largely trailed the S&P 500 since 1986. Here’s a breakdown of the JPM stock chart and financials.
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JPM Stock Fundamental Analysis
JPMorgan stock has a 44 Composite Rating, on a 1-99 scale, with 99 tops. Its EPS Rating stands at 64.
IBD encourages investors to focus on stocks with Composite Ratings of 90 or higher.
The stock’s SMR Rating is a C, with ‘A’ the highest possible rating.
JPMorgan Stock Technical Analysis
JPM stock is currently trading at around 119.
The stock, and its relative strength line, have trended lower in recent days. Longer term, the RS line shows that JPM stock has largely moved in line with the market going back to 1998, or even 1986.
That’s also a problem for banking giants such as Citigroup (C), Goldman Sachs (GS) and Bank of America (BAC). While bank stocks benefit in tandem with the economy, if the economy is doing well, so will the stock market generally.
Long-term outperformance has been ephemeral for JPM stock, even though it has generally outperformed its big peers.
Put another way, if you bought the SPDR S&P 500 ETF (SPY) back in 1998, you’d have the same or better returns with far less risk.
JPMorgan stock and its rivals can have periods of outperformance, as they did near the end of 2019. JPM stock, Goldman Sachs, Bank of America and others outperformed the market from April 2016 to March 2017, with most of those gains following former President Trump’s surprise election victory.
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Is JPM Stock A Buy?
JPMorgan has a market value of around $351 billion, according to MarketSmith. Its business is a one-stop financial shop for Wall Street and Main Street. But the stock is not in a base.
Bottom line: JPM stock is not a buy right now, based on IBD’s chart analysis.
Like other big banks, JPMorgan also has a poor record when it comes to beating the market for long stretches.
Check out IBD Stock Lists and other IBD content to find dozens of the best stocks to buy or watch.
Follow Bill Peters on Twitter at @IBD_BPeters.
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