Photo by Joshua Woroniecki on Unsplash

S&P 500 is trending sharply up at writing even after a strong U.S. jobs report on Friday.

Can the U.S. economy really avoid a recession?

U.S. employers added 336,000 jobs in September – well above 170,000 that economists had forecast. Wages up 4.2%, though, came in a bit shy of 4.3% expected.

Still, Marko Kolanovic – Chief Market Strategist of JPMorgan says higher rates remain a significant headwind for stocks. On CNBC’s “Fast Money”, he said:

The job market is still strong … We remain somewhat negative still. I’m not sure how we’re going to avoid it [recession] if we stay at this level of interest rates.

Last month, the U.S. Federal Reserve skipped a rate hike but signalled rates will likely remain elevated for longer after inflation jumped back to 3.7% in August versus 3.2% in July.

Kolanovic says ‘magnificent seven’ are most at risk

Cards and auto loans delinquencies suggest the consumer is starting to come under pressure, as per Marko Kolanovic, who started the year with a 4,200 target on the S&P 500 index.

He agreed that downside in the benchmark index may not materialise immediately. In fact, equities could gain 5.0% to 7.0% before they start to tumble – but when they do, the JPMorgan expert added, “it could be a 20% downside”.

More importantly, the market strategist touted “magnificent seven” as most vulnerable if the U.S. economy does indeed slide into a recession since the group is currently up a whopping 83% year-to-date.

The Bureau of Labour Statistics is slated to publish its next monthly inflation report on October 12^th.

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