JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon, who correctly flagged trouble before the 2008 Lehman Brothers collapse, is now cautioning that Wall Street’s expectations for S&P 500, tracked by SPDR S&P 500 (NYSE:SPY) earnings growth could plummet from 12% to 0% as tariff impacts ripple through the economy.
What Happened: “I think earnings estimates will come down, which means PE [Price-to-Earnings ratio] will come down,” Dimon said at the bank’s annual investor day, suggesting equity valuations face downward pressure. He described current asset prices as “kind of high” while credit spreads remain “kind of low.”
Hedge fund manager Dan Niles highlighted Dimon’s track record on X, noting, “Dimon warned of an economic ‘hurricane’ in June of 2022 before the banking crisis in March of 2023.” Niles emphasized JPMorgan’s unique perspective, writing, “With $4.4 trillion in assets, JPM has more granular data on the health of the U.S. economy than almost anyone.”
“I continue to believe that the holidays will be a much rougher time for markets,” Niles wrote.
Why It Matters: Dimon’s concerns extend beyond earnings, as he warned of “huge deficits” and “almost complacent central banks.” He believes markets display “an extraordinary amount of complacency” despite mounting risks from tariffs and geopolitical tensions, putting the odds of stagflation at “roughly double” what markets anticipate.
Despite these warnings, Goldman Sachs recently raised its S&P 500 12-month target to 6,500 while reducing recession odds to 35%, citing the Trump administration’s decision to pause retaliatory tariffs for 90 days.
JPMorgan’s chief global strategist, David Kelly, maintains the U.S. economy will likely avoid recession but expects slower growth due to tariffs and other economic factors potentially squeezing consumer spending.
Since taking the helm in 2005, Dimon has led JPMorgan to a total return of 1,012%, including dividends, surpassing the S&P 500’s 596% gain and even outpacing the Nasdaq’s 971% rise.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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