S&P 500 may crash 1,000 points, predicts ex-JPMorgan strategist
What's the story
Marko Kolanovic, a former top strategist at JPMorgan Chase & Co., has predicted a major crash in the US stock market.
Even as the S&P 500 Index trades above 6,000, hitting a new high just recently, Kolanovic expects it to fall up to 1,000 points or more.
He spoke about his views on Bloomberg's Odd Lots podcast saying "I do think we'll go back down in the 5,000s this year."
Market risks
Kolanovic warns of potential political turmoil
Kolanovic also warned the new political climate could push the S&P 500 Index even lower, perhaps into the 4,000s.
His prediction comes amid uncertainty with Big Tech stocks largely remaining flat over the past six weeks and fears of US losing its dominance in artificial intelligence (AI).
Concerns of persistent inflation forcing Federal Reserve officials to keep high interest rates longer than expected have also added to jitters.
Policy effects
White House policies and AI developments impact market
The new White House's policies are also viewed as possible disruptors to the economic and geopolitical landscape.
Last week, fears of a budget AI model from Chinese start-up DeepSeek triggered a $1 trillion rout in US equities. This included NVIDIA Corp.'s $593 billion market value loss in a single session, the biggest drop in US stock-market history.
Although equity indexes have recouped most of those losses, Kolanovic believes more turbulence lies ahead.
Market skepticism
Consistent warnings about market risks
Before leaving JPMorgan, Kolanovic was a vocal skeptic of the stock market rally that began in October 2022.
He consistently warned about risks including a slowing economy, geopolitical tensions, and waning momentum from high-flying stocks driving market gains.
From a technical perspective, he cautions a historically high concentration makes stocks vulnerable to a sharp reversal and predicts a cyclical downturn to "purge and normalize" soaring valuations is likely.
Future outlook
Predictions and future plans
Kolanovic, who built his reputation as a market soothsayer with accurate calls on 2015's stock slump and 2018's "Volmageddon" volatility blowup, hasn't announced his next move yet.
Despite being bullish in much of 2022 as the S&P 500 sank 19%, he remains bearish through double-digit rallies in 2023 and 2024.
After leaving JPMorgan, he joined social media platforms including Elon Musk's X but has no plans to join TikTok for making market forecasts.