JPMorgan's trading division has turned tactically bullish on the U.S. stock market, predicting that favorable factors such as earnings from major tech companies and trade agreement announcements will continue to boost the market following the recent market downturn.

However, the bank quickly emphasized in a note to clients on Monday that the rebound momentum may fade within weeks as the negative impact of U.S. tariffs begins to weigh on the economy in the coming months.

The bank's global market intelligence head, Andrew Tyler, wrote: "Overall, there is room for an upward trade in de-escalating trade tensions." However, he added, "This does not mean that all market risks have been eliminated."

On Monday, U.S. stocks experienced volatility, with the S&P 500 index dropping as much as 1% in afternoon trading, while the tech-heavy Nasdaq 100 index fell by 1.4%. Earlier, U.S. stocks had their second-best week since 2025 due to President Trump's boasting about progress in trade negotiations.

Tyler and his team had previously held a "tactically bearish" view on U.S. stocks, noting that their latest perspective differs from their past bullish stance as it is primarily based on technical factors rather than just fundamentals.

They wrote: "Light positioning, low liquidity, and low investor participation mean that the market could rise in the absence of negative news such as tariff announcements or surging bond yields."

They also added that any announced trade agreements could present a positive risk-reward scenario.