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Pro Analysis

JPMorgan: Investors should rotate into these sectors with GOP tax plan

A worker uses a heat gun to smooth out the wrinkles on a car seat during production at the Lear Corp. manufacturing facility in Hammond, Indiana.
Jim Young | Bloomberg | Getty Images
A worker uses a heat gun to smooth out the wrinkles on a car seat during production at the Lear Corp. manufacturing facility in Hammond, Indiana.

With the Republican tax plan headed to the bicameral conference committee, JPMorgan is encouraging investors to make some tweaks to their portfolios.

A reduced corporate tax rate like that proposed in the GOP tax plan may be just the type of catalyst the market needs to spark rotation into value and away from growth stocks, according to strategist Dubravko Lakos-Bujas.

"We viewed the U.S. Tax legislation as the most significant upside catalyst for equities given the market was underpricing the probability of passage," explained Lakos-Bujas in Monday's note to clients. "While the tax trades have been gradually moving higher since the House passed its bill mid-November, the rotation across styles, sectors, and specialized portfolios accelerated on legislative progress last week. In fact, some of the moves appeared panicked."