A stock market correction may be imminent, JPMorgan says. Here’s why you shouldn’t panic

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The typically muted month of August is upon us but there’s still a lot for investors to digest.

Talks over another coronavirus stimulus package that would restore jobless benefits to millions of Americans continued into the weekend and will remain in focus this week. However, lawmakers reportedly remain far apart in the negotiations. U.S.-China tensions are also back in the spotlight after President Trump said he would ban Chinese videosharing app TikTok. Technology company Microsoft MSFT, -2.18% confirmed talks on Sunday to buy TikTok, owned by Chinese company ByteDance, after a call between Chief Executive Satya Nadella and Trump.

It is also another big week of earnings, with 130 members of the S&P 500 — including ridesharing app Uber UBER, 4.47%, entertainment company Disney DIS, 0.32% and plant-based-food producer Beyond Meat BYND, 2.93% — set to report second-quarter results.

In our call of the day, JPMorgan strategists say a modest stock market correction could occur in the next few weeks but doesn’t justify bearish targets or even a defensive investment strategy.

They say key coming data releases, such as payrolls on Thursday and retail sales on Aug. 14 could “undershoot expectations” and drive the modest correction.