Wells Fargo analysts join JPMorgan traders in cautious stance on US stocks

Wall Street’s mood is shifting. Wells Fargo equity strategist Ohsung Kwon has joined JPMorgan’s trading desk in adopting a more cautious outlook on US equities, marking the second major bank this week to flash yellow ahead of what promises to be a turbulent stretch for markets.

What triggered the downgrade

JPMorgan’s market-intelligence team, led by Andrew Tyler, shifted to a “tactically cautious” stance on August 31, 2026. The catalyst was hawkish commentary from Federal Reserve Chairman Kevin Warsh, which pushed expectations higher for a September interest rate hike.

This wasn’t JPMorgan’s first tap on the brakes, either. The bank had already made a tactical downgrade back in June 2026, suggesting that the current posture is part of a broader pattern of incrementally dimming enthusiasm rather than a single knee-jerk reaction.

Wells Fargo’s Kwon had been sounding similar notes since at least June, when he flagged that the AI-driven market rally was running out of positive catalysts.

September’s seasonal curse and midterm math

September stands alone as the weakest month for US equity returns. Researchers have documented this pattern across decades of market data, and institutional strategists routinely factor it into their positioning.

Layered on top of that seasonal headwind is the uncertainty surrounding the 2026 midterm elections. Midterms can reshape the legislative landscape overnight, affecting tax policy, regulation, and government spending.

The AI rally’s fading momentum

Much of 2026’s equity market gains have been concentrated in a narrow band of stocks tied to artificial intelligence. Kwon’s argument, first laid out in June, is that the positive catalysts driving the AI trade have largely been priced in. Earnings beats, new product launches, and infrastructure spending announcements had already been absorbed by the market.

JPMorgan’s Tyler appears to share this concern. By moving to a neutral tactical stance, the bank’s trading desk is effectively telling clients that the risk-reward calculus for chasing the AI trade has deteriorated in the near term.

Tactical, not structural

Both banks are careful to frame their caution as a short-term positioning call, not a fundamental indictment of the US economy or corporate earnings trajectory. Long-term earnings growth projections remain healthy, and both Wells Fargo and JPMorgan maintain a longer-term positive outlook on equities supported by robust economic indicators.