COVID-19 mutations and lofty valuations are the stock market’s biggest risks, JPMorgan survey says

COVID-19 mutations and lofty valuations are the stock market’s biggest risks, JPMorgan survey says

Investors are split on which downside risks are most likely to topple the stock market's bull run.

JPMorgan surveyed clients attending its Macro Quantitative conference in late January on several aspects of the current investing landscape. The questioning came as stocks sat near then-record highs, lifted by hopes for another stimulus bill and declining COVID-19 case counts.

Concerns of overvaluation and the emergence of new COVID-19 variants have since dented the market's run-up, and those risks remain top of mind for investors. About 29% of surveyed investors deemed coronavirus mutations the biggest risk to markets, while 28% cited a correction in expensive equity sectors, according to JPMorgan. Roughly one-fifth of respondents named rising yields and stronger inflation as a major risk.

Only 13% of investors cited concerns of central-bank tapering. The Federal Reserve has indicated it won't slow the pace of its asset purchases until the US economy makes "substantial further progress" toward reaching above-2% inflation and maximum employment. For now, the Fed continues to buy at least $80 billion of Treasurys and $40 billion of mortgage-backed securities each month.

A double-dip recession scenario was the least-feared market risk, garnering just 9% of investors' votes.

Nearly 60% of investors thought cryptocurrencies were in a bubble.