JPMorgan Warns Investors To Brace For Incoming Volatility, Says ‘Goldilocks’ Narrative Still Dominating Markets: Report

JPMorgan reportedly warned investors to be prepared and exercise caution, noting that the “goldilocks” narrative is still dominating U.S. equity markets.

In a recent note seen by CNBC, JPMorgan’s Fabio Bassi, head of cross-asset strategy, urged investors to brace for incoming volatility in U.S. equities, more so if macroeconomic data continues to come in weaker than Wall Street’s expectations.

“The Goldilocks narrative remains the broad consensus on the back of the ‘Fed put’, stable jobless claims, strong earnings, and the AI theme. Investors are questioning the catalysts for a correction in risk assets, when the Fed is ‘coming to the rescue’ and the outlook in 2026 looks rosier,” said Bassi, according to the report.

The JPMorgan analyst urged investors not to be complacent, the report said, adding that bad macroeconomic news has been perceived as good news due to the cushion of a “Fed put,” referring to the expectations of the Federal Reserve announcing an interest rate cut that President Donald Trump has been asking for over the past few months.

Bassi added that if macroeconomic weakness turns out to be large or persistent, it could be “truly detrimental,” according to the report. He said that while a recession currently does not factor into his expectations, the downside risk has grown following the run-up in U.S. equities in 2025 so far.

The Dow Jones index has gained nearly 6% year-to-date, while the S&P 500 index has surged around 10%. The tech-heavy Nasdaq 100 index has rallied almost 13% during this period.

IG Bank and Goldman Sachs analysts echoed similar views in recent notes. IG Bank analysts stated that sentiment indicators are flashing warning signals. “​The recent moderation in sentiment indicators may indicate that the market is beginning to recognise some of these underlying risks, though whether this represents a healthy correction or the beginning of a more significant adjustment remains unclear,” they said.

Meanwhile, U.S. equities edged lower in Monday’s midday session. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.06%, while the Invesco QQQ Trust (QQQ) fell 0.16%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.

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