JPMorgan has identified pockets within the consumer complex that it considers attractive entry points ahead of the second half of 2026, arguing that a trough in consumer stocks may be taking shape after an extended stretch of underperformance.
Analyst Mislav Matejka noted that, while many cyclical sectors gained ground this year - banks on rising rates, industrials from infrastructure activity and technology on the back of AI demand - consumer cyclicals have lagged. He observed that this segment has been the "one area that has struggled," remaining beneath the performance seen during the post-COVID V-shaped recovery.
JPMorgan's assessment emphasizes three related characteristics of consumer plays today: their price relatives sit at multi-year lows, valuations are broadly undemanding and measures of consumer confidence in much of the world are near record lows. The bank points to historical patterns in which consumer equities have tended to perform better after periods when confidence reached low levels.
The bank outlined several potential catalysts that could help lift consumer sectors in the back half of the year. One is easing geopolitical uncertainty, which JPMorgan says could weigh on oil prices. The bank highlights that Brent is already down 25% quarter-over-quarter, and argues that softer energy costs should bolster real disposable incomes and ease the need for continued central bank tightening.
JPMorgan also noted that tariff rates have declined year-to-date, which it views as a positive for consumer goods categories. In addition, the bank flagged the U.S. midterm elections as a factor that raises the possibility of a consumer relief package, a development that could support household finances.
On sector preferences, JPMorgan singled out luxury, airlines, hotels, travel and leisure, and retail consumer names as the areas it finds most interesting heading into the second half of the year. By contrast, the bank said it remains relatively less optimistic about the autos sector due to structural concerns, even as it acknowledged that recent underperformance within autos has become stretched.
Outlook - JPMorgan views current market conditions for consumer cyclicals as a potential turning point, contingent on the realization of the cited catalysts. The bank's stance is selective: it favors several consumer sub-sectors while maintaining caution on autos.