JPMorgan: Foreign Investors Will Return as Retail Buyers Fuel U.S. Stock Rally Retail investors have played a major role in powering this year’s market gains — and JPMorgan believes they’re about to take the lead again. In a new report, strategist Nikolaos Panigirtzoglou and his team forecast a massive $500 billion in net inflows into U.S. equities over the second half of 2025, with retail investors expected to contribute around $360 billion of that total. The result? Potential gains of 5% to 10% by year-end. After aggressively buying the dip in March and April, retail investors pulled back in May and June to lock in profits. But JPMorgan says this was a temporary pause — not a sign of fading interest. “We expect retail investors to resume equity buying and continue supporting the market from July onward,” the strategists wrote. Other investor groups may offer limited upside. Hedge funds have already boosted their equity exposure and likely won’t add much more. Quantitative funds, which reduced positions earlier in the year, could re-enter later. Pension funds and insurers, however, are expected to keep selling stocks as they rotate toward bonds — with estimated outflows of $360 billion this year. One surprising potential source of renewed demand? Foreign investors. According to JPMorgan, overseas buyers have largely stayed on the sidelines since February — a trend they describe as a short-term “boycott” of U.S. equities. But that’s unlikely to continue for long. “Foreign investors can’t ignore the most dynamic part of the global equity market — the S&P 500 and the Magnificent 7,” the strategists said. The key to their return may lie in currency stability. A weaker dollar has discouraged international investment, but the ICE Dollar Index (DXY) is now hovering near its April lows around 98. If the dollar stabilizes, JPMorgan believes foreign inflows could rebound by another $50 billion to $100 billion. Combined, these factors could drive nearly half a trillion dollars into U.S. equities in the months ahead — and fuel another leg of the rally.

Markets Slip as Trump Threatens New Tariffs Ahead of Deadline U.S. equity futures declined and the dollar weakened after President Trump signaled a potential escalation in trade tensions, saying his administration may begin sending letters to trading partners outlining new unilateral tariffs as early as Friday. “We’re probably going to start sending some letters out tomorrow—maybe 10 a day—to various countries explaining what they’ll have to pay to do business with the U.S.,” Trump told reporters Thursday, just days ahead of the July 9 deadline for trade negotiations. Markets had been rallying, with the S&P 500 closing at a record high Thursday after a holiday-shortened session, up 26% from its April low. The rally was partly fueled by optimism that Trump had backed off his aggressive April 2 tariff proposal, which had pushed import duties to levels not seen in over a century. But Trump’s latest remarks suggest that few, if any, trade deals will be reached before the deadline, renewing fears of heightened protectionism. Deutsche Bank strategist Jim Reid noted Trump floated tariffs between 10% and as high as 60–70%, potentially taking effect on August 1. “That kind of range has major economic implications depending on the country,” Reid said. Though U.S. equity and bond markets are closed for Independence Day, futures are still trading. The E-mini S&P 500 fell 0.6% early Friday, as investors appeared to shrug off the passage of the GOP’s sweeping tax-cut bill. The dollar also weakened, down 0.4% against the yen and 0.2% versus the euro. Globally, markets were under pressure, particularly in economies more vulnerable to U.S. trade penalties. South Korea’s KOSPI dropped 2%, Germany’s DAX slipped 0.8%, and France’s CAC 40 fell 1% by midday in Europe. “Risk appetite is fading fast,” said Kathleen Brooks, research director at XTB. “Trump appears to have walked away from negotiations, choosing instead to play hardball with trade partners.” Concerns over slowing global trade hit commodities, with copper futures falling 1.7% and oil down 1.3%. “Optimism is fading fast as the U.S. tariff deadline approaches,” said Susannah Streeter of Hargreaves Lansdown. “The signs point to steeper and broader tariffs than expected.” Gold rose 0.2% to around $3,350 an ounce, while bitcoin slipped 0.5% amid the broader risk-off sentiment.