Key Takeaways
- JPMorgan advises investors with 3–12 month time frames to purchase stocks during market downturns
- Strategist Mislav Matejka cautions against adopting pessimistic positions amid geopolitical uncertainty
- Earnings projections for the S&P 500 continue their upward trajectory
- The investment bank favors global equities, emerging markets, smaller companies, and value stocks for superior performance
- JPMorgan highlights critical differences between 2026 and 2022 regarding inflation dynamics and employment trends
In a research memo released Monday, JPMorgan advised clients to view market downturns as strategic entry points. The financial institution maintains that conditions favor another swift market rebound.
Mislav Matejka, JPMorgan’s head of European strategy, authored the analysis. He emphasized that investors planning to hold positions for three to twelve months should increase their market exposure during selloffs rather than retreating.
Matejka acknowledged current geopolitical tensions, including concerns surrounding the Strait of Hormuz and escalating Iran-related conflicts. While he recognized that military confrontations generate market turbulence, he contended that maintaining a bearish stance carries substantial opportunity costs.
According to JPMorgan’s assessment, pessimistic sentiment had become widespread roughly two to three weeks after conflict escalation. Market participants anticipated sharp increases in oil prices, prompting significant reductions in equity allocations.
The firm identified this positioning, coupled with oversold technical indicators, as an ideal moment to accumulate stocks. JPMorgan initially recommended this approach on March 23.
Why 2026 Isn’t a Repeat of 2022
Matejka outlined key distinctions between the current market environment and 2022. Inflationary forces are less pronounced today, companies possess diminished pricing authority, and compensation increases are being moderated partly through artificial intelligence implementation.
Real interest rates and employment conditions also contrast sharply with 2022, when pandemic-related distortions complicated inflation management. Given these differences, JPMorgan is advocating for long-duration investments that respond favorably to interest rate movements.
The institution anticipates that central banks will tolerate an anticipated 1.5 percentage point increase in annual inflation rates. Matejka suggested that inflation expectations remain firmly anchored.
Earnings forecasts for S&P 500 companies through 2026 continue climbing. The ISM manufacturing index, a key US growth metric, has reached its highest levels in three years. European corporate earnings could surge 18.2% in 2026.
The Citigroup Economic Surprises Index currently shows robust positive readings, the memo noted.
JPMorgan’s Preferred Investment Areas
JPMorgan anticipates that international equities and emerging markets will once again outpace US stocks. The bank also prefers smaller companies and value-oriented investments over growth stocks.
Prior to the Iran situation, global stocks had already delivered 11% superior returns compared to US markets. JPMorgan projects this pattern will reemerge during the latter half of 2026 as geopolitical tensions subside and dollar strength associated with safe-haven flows diminishes.
Emerging market stocks continue trading at a 34% valuation discount relative to developed markets. MSCI Europe currently trades at 14 times projected 2026 earnings, while the S&P 500 commands a 19.5 times multiple.
Matejka indicated that capital flows into emerging markets, which paused during recent conflicts, should restart. The bank’s relative performance analysis suggests new record highs are achievable in the year’s second half.
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