JPMorgan upgrades steel stocks amid Fed rate decision and elections

JPMorgan has upgraded the ratings of several North American steel companies, including Nucor, Steel Dynamics, and United States Steel, in light of improving market conditions. Analyst Bill Peterson noted that these companies are now more attractively valued following a period of pressure due to weakening fundamentals. The upgrades come as the market anticipates a potential improvement in the rate environment and a stable backdrop following the upcoming elections in 2025. Nucor Corp's rating was upgraded from Neutral to Overweight, with a price target increase from $170 to $174. Steel Dynamics saw its rating rise from Underweight to Neutral, with a new price target of $131, up from $120. United States Steel's rating was also upgraded to Overweight, with a price target increase from $40 to $42. Despite these positive adjustments, Peterson cautioned that the companies may provide conservative outlook comments due to lower lagged-contract pricing and cautious buying behavior. The analyst highlighted that uncertainties surrounding Federal Reserve rates and election outcomes could weigh on demand in the latter half of the year, potentially leading to further adjustments in consensus estimates. Nucor and United States Steel are viewed as the most well-positioned for growth in the upcoming year, benefiting from strong product diversification. As of the publication date, shares of Nucor, Steel Dynamics, and United States Steel had all experienced notable increases, reflecting positive market sentiment. The recent pullback in United States Steel's stock is seen as an attractive buying opportunity, suggesting a favorable outlook for investors in the steel sector.