JPMorgan: The S&P 500 could surge 10% in a single day if the Fed does these two things tomorrow — here are 3 top stocks to bet on it

But according to JPMorgan’s trading desk, there’s one specific scenario that could send stocks soaring.

The bank’s team projects that if the central bank raises interest rates by just 50 basis points and Fed Chair Jerome Powell expresses his willingness to tolerate inflation and tight labor market conditions, the S&P 500 could climb more than 10% in a day.

“It is difficult to conceive of a scenario where this outcome occurs given inflation levels and a tight labor market,” the team writes. “Should this outcome occur, the immediate reaction could produce a double-digit one-day return for equities.”

Right now, the bank’s economists are still projecting a 75-basis-point increase like other market participants. But that doesn’t mean there’s no opportunity for equity market investors. Here’s a look at three stocks that JPMorgan finds particularly attractive — even in these market conditions.

Apple (AAPL)

No one who spends $1,600 for a fully decked-out iPhone 14 Pro Max would call it a steal. But consumers love splurging on Apple products anyway.

Earlier this year, management revealed that the company’s active installed base of hardware has surpassed 1.8 billion devices.

While competitors offer cheaper devices, millions of users don’t want to live outside of the Apple ecosystem. The ecosystem acts as an economic moat, allowing the company to earn oversized profits.

It also means that as inflation spikes, Apple can pass higher costs to its global consumer base without worrying too much about a drop in sales volume.

After seeing Apple’s earnings report last week, JPMorgan analyst Samik Chatterjee said that the company’s "resilience to a tough macro through the mix of Products and Services is likely to drive a re-rating.”

The analyst maintains an ‘overweight’ rating on Apple and a price target of $200 — around 32% above the current levels.

Nvidia (NVDA)

As a leading designer of graphics cards, Nvidia shares have had a solid bull run over the past decade. But that rally came to an abrupt end in November 2021. Since reaching a peak of $346 in late November, the stock has fallen by a staggering 60%.

Nvidia’s plunge is substantial even when compared to other beaten-down stocks in the semiconductor sector.

Nvidia’s business is still on the right track, making it a particularly intriguing contrarian idea. The chipmaker generated $6.70 billion of revenue in its fiscal Q2. The amount represented a 3% increase year over year.

Revenue from data center increased 61% year over year to $3.81 billion.