Wall Street‘s biggest bank is not telling investors to panic. But it is telling them to brace for more turbulence before things get better.
Mislav Matejka, JPMorgan’s head of global equity strategy, warned in a note to clients that equities could face additional short-term weakness before stabilizing, as geopolitical tensions continue to drive a wave of risk reduction across markets.
The note, which landed as the S&P 500 slipped and the Nasdaq fell more than 2% in 2026 so far, carries a carefully measured message: the pain is real, but it is also temporary.
Days or weeks, not months
The key phrase in the note is the timeline. JPMorgan expects the current episode of market stress to last days or weeks, not months. That framing matters because it shapes how investors should respond.
Rather than positioning defensively for a prolonged downturn, the bank is telling clients to watch for oversold conditions and stretched positioning to clear. Once that happens, JPMorgan sees the selloff flipping into a buying opportunity.
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“Rising Iran-related tensions are not a signal to exit equity markets, but a buying opportunity,” the bank said, with Matejka recommending investors look to add positions during the weakness rather than reduce them.
The two near-term risks he flagged
JPMorgan was direct about where the pressure is coming from in the short term. The bank flagged oil and bonds as the two variables most likely to keep markets on edge before any stabilization takes hold.
On oil, JPMorgan acknowledged prices could spike further in the near term following the Hormuz disruption. But the bank was also careful to note that the move so far is smaller in scale than what markets absorbed during the Russia-Ukraine war in 2022. That comparison is meaningful: if markets survived that shock, the current one may prove more manageable than headlines suggest.
The pass-through to consumers, however, is already visible. U.S. gasoline prices have jumped 10 to 15% according to the note, a development that tends to hit consumer confidence quickly before it shows up in official inflation data.
Where JPMorgan sees opportunity emerging
JPMorgan’s note was not all caution. The bank pointed to specific pockets of the market it expects to benefit once the current wave of selling clears and positioning resets.
Sectors and markets JPMorgan highlighted as opportunities
- Industrials — a sector JPMorgan has consistently favored heading into 2026, with hedge funds already building positions
- Semiconductors — beaten down alongside the broader tech selloff but fundamentally intact per the bank’s view
- Consumer discretionary — oversold relative to underlying consumer spending data
- Emerging markets and the eurozone — areas JPMorgan has favored as alternatives to a crowded U.S. equity trade
- Oversold hyperscalers and AI laggards — the bank noted the tech repricing is largely complete, limiting further downside
The broader context: fundamentals still intact
What underpins JPMorgan’s relatively calm read on the situation is its assessment of the macro backdrop. The bank’s base case assumes the Iran conflict will not escalate into sustained infrastructure damage or a prolonged Hormuz closure.
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Under that scenario, the bank sees oil fundamentals remaining soft once tensions ease, with the price spike proving temporary rather than structural. Earnings delivery for 2026 remains solid in JPMorgan’s models, and the growth and inflation tradeoff is still described as supportive.
JPMorgan also noted that much of the repricing in tech and AI-related stocks has already happened, which limits how much further that part of the market can fall from here.
Brace for impact, then buy the dip
JPMorgan’s message is disciplined and specific. More short-term pain is likely. The window is days or weeks. And when markets find a bottom, possibly as soon as this week or next, the bank wants its clients positioned to capture the rebound rather than sitting on the sidelines waiting for the all-clear.
The risk, as always, is that the conflict deepens beyond JPMorgan’s base case. But for now, the bank’s call is clear: use the weakness, do not flee from it.
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